As Filed With The Securities And Exchange Commission On July 3, 2003
File No. 811-3651
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
TOUCHSTONE STRATEGIC TRUST
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(Exact Name of Registrant as Specified in Charter)
221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices) (Zip Code)
(800) 543-0407
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(Registrant's Telephone Number, Including Area Code)
Patrick T. Bannigan
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
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(Name and Address of Agent for Service of Process)
Copies to:
Samuel Kornhauser, Esq.
155 Jackson Street, Suite 1807
San Francisco, California 94111
Approximate Date of Proposed Public Offering is as soon as practicable after
this Registration Statement becomes effective.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940; accordingly, no fee is payable herewith. The Registrant has
undertaken to file on May 31, 2004, a Rule 24f-2 Notice for its most recent
fiscal year ended March 31, 2004.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
TOUCHSTONE STRATEGIC TRUST
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following
pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letters to Shareholders
Notice of Special Meeting
PART A
Combined Prospectus/Proxy Statement
PART B
Statement of Additional Information
PART C
Other Information
Signatures
Exhibits
TOUCHSTONE STRATEGIC TRUST
REGISTRATION STATEMENT ON FORM N-14
CROSS REFERENCE SHEET
N-14 LOCATION IN
ITEM NO. REGISTRATION STATEMENT
-------- ----------------------
PART A. INFORMATION REQUIRED IN PROSPECTUS/PROXY STATEMENT
1. Beginning of Registration Cover Page; Cross Reference Sheet
Statement and Outside Front
Cover Page of Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Synopsis and Risk Factors Synopsis; Principal Risk Factors
4. Information About the Synopsis; The Proposed Transactions;
Transaction Appendix A
5. Information About the Synopsis; Comparison of Investment
Registrant Objectives and Policies; Principal Risk
Factors; Additional Information About the
Acquiring Fund and the Acquiring Fund
Shares; Miscellaneous; Current Prospectus
of the Large Cap Growth Fund
6. Information About the Synopsis; Comparison of Investment
Companies Being Acquired Objectives and Policies; Principal Risk
Factors; Additional Information About the
Portfolios and the Portfolios' Shares;
Current Prospectuses of The Navellier
Large Cap Growth Portfolio of The Navellier
Performance Funds and of The Navellier Large Cap
Growth Portfolio of The Navellier Millennium Funds
7. Voting Information Introduction and Voting Information;
Synopsis
8. Interest of Certain Persons Introduction and Voting Information; The
and Experts Proposed Transactions; Miscellaneous
9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
N-14 LOCATION IN
ITEM NO. REGISTRATION STATEMENT
-------- ----------------------
PART B: INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About Current Statement of Additional
the Registrant Information of The Large Cap Growth Fund
of the Touchstone Strategic Trust
13. Additional Information About Current Statements of Additional
the Companies Being Acquired Information of The Navellier Performance Funds
and of The Navellier Millennium Funds
14. Financial Statements Current Annual Report of the Large Cap Growth Fund
of the Touchstone Strategic Trust (March 31, 2003);
The Navellier Large Cap Growth Portfolio of the
Navellier Performance Funds (December 21, 2002);
The Navellier Large Cap Growth Portfolio of The
Navellier Millennium Funds (December 31, 2002);
"PRO FORMA FINANCIAL STATEMENTS" (December 31,
2002)
PART C: OTHER INFORMATION
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
THE NAVELLIER MILLENIUM FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
July 18, 2003
TO THE SHAREHOLDERS OF
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
Dear Shareholder:
A special meeting of the shareholders of The Navellier Large Cap Growth
Portfolio (the " Millennium Portfolio"), a series of The Navellier Millennium
Funds will be held at 10:00 A.M., Pacific Standard Time, on August 22, 2003, or
a date shortly thereafter, at the offices of The Navellier Millennium Funds, One
East Liberty Street Third Floor, Reno, Nevada 89501 (the "Meeting"). The
shareholders of the Millennium Portfolio (the "Shareholders") will vote on a
proposed Agreement and Plan of Reorganization (the "Plan"). Under the Plan, the
Navellier Large Cap Growth Portfolio ("Millennium Portfolio")of The Navellier
Millennium Funds and The Navellier Large Cap Growth Portfolio (the "Portfolio")
of The Navellier Performance Funds will merge into the Touchstone Large Cap
Growth Fund (the "Acquiring Fund"), a separate portfolio of the Touchstone
Strategic Trust (the "Reorganization"). Upon completion of the proposed
Reorganization, the investment objective and investment strategies of the
Touchstone Large Cap Growth Fund will be changed to those of Navellier Large Cap
Growth Portfolios. Touchstone Large Cap Growth's investment objective therefore
would be identical to the investment objective of Navellier Millennium Large Cap
Growth and Touchstone Large Cap Growth's investment policies would be
substantially identical to those of the Millennium Portfolio. In addition, the
investment manager of Touchstone Large Cap Growth will change the investment
sub-advisor of Touchstone Large Cap Growth to the manager of the Navellier Large
Cap Growth and of the Millennium Portfolio, Navellier Management, Inc.
If you own class 'A', 'B', or 'C' shares of the Navellier Millenium Large Cap
Growth Portfolio you will receive Class 'A', 'B', or 'C' shares of The
Touchstone Large Cap Growth Fund, respectively. Although the number of shares
you hold may change, the total value of your investment will not change as a
result of the Reorganization. You will not incur any sales loads or similar
transaction charges as a result of the Reorganization.
The Acquiring Fund has three classes of shares. The Class 'A' shares charge an
initial sales charge of 5.75%, the Class 'B' shares charge a contingent deferred
sales charge which is incrementally reduced over time from 5% on redemptions
within a year of purchase down to 0% on redemptions after six years. The Class
'C' shares charge a 1% contingent deferred sales charge on redemptions within
one year of purchase. Like the Millennium Portfolio, the Class 'A' Shares of the
Acquiring Fund are charged an annual 12b-1 fee of 0.25%, and Class 'B' and 'C'
shares of the Acquiring Fund are charged an annual 12b-1 fee of 1.00%.
The Acquiring Fund charges an annual management fee of 0.75% of assets under
management which is less than the annual 1.00% you are charged now.
If the Plan is approved and implemented by the Millennium Portfolio, the
Shareholders of the Millennium Portfolio will become shareholders of the
Acquiring Fund and will receive shares of the Acquiring Fund having an aggregate
value equal to the aggregate value of his or her investment in the Millennium
Portfolio. No sales charge will be imposed as a result of the Reorganization.
Prior to completion of the Reorganization, the
Acquiring Fund and the Millennium Portfolio will have received an opinion of
counsel indicating that the Reorganization will qualify as a tax-free
reorganization for Federal income tax purposes.
I and the Trustees of the Millennium Portfolio by a unanimous vote have
voted in FAVOR of the proposed merger and are urging you and the other
Millennium Portfolio shareholders to vote FOR a merger of the Millennium
Portfolio into the Acquiring Fund. I and the other Millennium Portfolio Trustees
("Management") are soliciting your proxy (vote) because we believe that the
proposed merger should benefit Shareholders by reducing portfolio operating
costs.
We believe that this Reorganization is in the best interest of the
Millennium Portfolio and the Shareholders and, therefore, recommend that the
Shareholders vote FOR approving the Plan.
WE STRONGLY URGE YOU TO REVIEW, COMPLETE, AND RETURN YOUR GOLD PROXY CARD AS
SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
VOTING YOUR SHARES EARLY WILL HELP TO AVOID COSTLY FOLLOW-UP MAIL AND TELEPHONE
SOLICITATION. LOUIS NAVELLIER AND NAVELLIER MANAGEMENT, INC. ARE PAYING FOR THIS
PROXY SOLICITATION AND WILL NOT SEEK REIMBURSEMENT FROM THE MILLENNIUM PORTFOLIO
OR YOU. AFTER REVIEWING THE ENCLOSED MATERIALS, PLEASE EXERCISE YOUR RIGHT TO
VOTE TODAY AND VOTE FOR THE MERGER BY COMPLETING, DATING, AND SIGNING EACH PROXY
CARD YOU RECEIVE AND MAILING THE PROXY IN THE SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE TO THE NAVELLIER MILLENNIUM FUNDS AT ONE EAST LIBERTY STREET, THIRD
FLOOR, RENO, NEVADA 89501. IT IS VERY IMPORTANT THAT YOU VOTE AND THAT YOUR
VOTING INSTRUCTIONS BE RECEIVED NO LATER THAN August 18, 2003 OR A DATE SHORTLY
THEREAFTER.
Please note that you may receive more than one proxy package if you hold
shares of the Millennium Portfolio in more than one account. You should return
separate proxy cards for each such account. If you have any questions, please
call Navellier Management, Inc. at 1-800-887-8671.
Sincerely,
Louis G. Navellier
--------------------------------------
Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Millennium Funds
THE TRUSTEES OF
THE NAVELLIER MILLENNIUM FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
------------------------
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD August 22, 2003 OR A DATE SHORTLY THEREAFTER
To: The Shareholders of the Navellier Large Cap Growth Portfolio of The
Navellier Millennium Funds
You are hereby notified that a Special Meeting of the Shareholders of The
Navellier Large Cap Growth Portfolio of The Navellier Millennium Funds will be
held at the offices of The Navellier Millennium Funds, One East Liberty Street,
Third Floor, Reno, Nevada 89501 on August 22, 2003 or a date shortly thereafter
at 10:00 a.m. (Pacific Standard Time), for the purpose of considering and voting
upon the following matter:
PROPOSAL 1.
To approve a proposed Agreement and Plan of Reorganization (the
"Plan"), whereby The Navellier Large Cap Growth Portfolio ("Millennium
Portfolio") would transfer all of its assets to the Large Cap Growth
Fund, a portfolio of the Touchstone Strategic Trust (the "Acquiring
Fund") in a tax-free exchange for shares of beneficial interest in the
Acquiring Fund that would be distributed to the shareholders of the
Millennium Portfolio. Also, as part of the Plan, the Acquiring Fund
would assume all valid liabilities of the Millennium Portfolio. Also,
as part of the Plan, the Acquiring Fund would acquire all of the
assets and liabilities of the Navellier Large Cap Growth Portfolio of
the Navellier Performance Funds.
The transactions contemplated by the proposed Plan of Reorganization and
related matters are described in the attached Combined Prospectus/Proxy
Statement. A copy of the form of the proposed Plan is attached as Appendix A
thereto. A copy of the Investment Advisory Fee Agreement between the Acquiring
Fund and Touchstone Advisors, Inc. and a copy of the sub-advisory agreement
between Touchstone Advisors, Inc. and Navellier Management, Inc., reducing the
total annual management fee that will be charged to you after the merger to
0.75% of the Acquiring Fund's net asset value per annum are attached thereto as
Appendix B and Appendix C respectively. A copy of the Acquiring Fund's 12b-1
Plan is attached thereto as Appendix D.
You are entitled to vote at the Meeting, and any adjournment(s) thereof, if
you owned shares of the Millennium Portfolio at the close of business on June
30, 2003. If you attend the Meeting, you may vote your shares in person. If you
do not expect to attend the meeting, please complete, date, sign, and return the
enclosed proxy card marked FOR in the enclosed self-addressed, postage-paid
return envelope.
Louis G. Navellier
--------------------------------------
Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Millennium Funds
July 18, 2003
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE VOTE "FOR" PROPOSAL 1 ON THE ENCLOSED GOLD PROXY CARD, THEN PLEASE
DATE AND SIGN THE CARD AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED. IF
YOU SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR
SHARES WILL BE VOTED "FOR" THE PROPOSAL NOTICED ABOVE. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE AND DELAY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR GOLD PROXY CARD PROMPTLY SO THAT A QUORUM MAY BE ENSURED. A VOTE
OF 67% OF THE SHARES OF THE MILLENNIUM PORTFOLIO WHICH ARE PRESENT IN PERSON OR
BY PROXY AND ENTITLED TO VOTE (IF MORE THAN 50% OF THE OUTSTANDING SHARES OF
RECORD ARE PRESENT IN PERSON OR BY PROXY) OR MORE THAN 50% OF THE OUTSTANDING
SHARES ENTITLED TO VOTE, WHICHEVER IS LESS, IS REQUIRED TO PASS ANY PROPOSAL, SO
RETURN OF YOUR PROXY IS IMPORTANT. UNLESS PROXY CARDS SUBMITTED BY CORPORATIONS
AND PARTNERSHIPS ARE SIGNED BY THE APPROPRIATE PERSONS AS INDICATED IN THE
VOTING INSTRUCTIONS ON THE PROXY CARD, SUCH PROXY CARDS CANNOT BE VOTED.
Louis G. Navellier
--------------------------------------
Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Millennium Funds
PROXY SOLICITATION
BY
THE TRUSTEES OF
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO OF
THE NAVELLIER MILLENNIUM FUNDS
------------------------
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
COMBINED PROSPECTUS/PROXY STATEMENT
This combined prospectus/proxy statement is being furnished in connection
with the solicitation of proxies by the Trustees of The Navellier Large Cap
Growth Portfolio ("Millennium Portfolio") of The Navellier Millennium Funds
("Fund"), for use at a special meeting of shareholders ("Shareholders") of the
"Portfolio" to be held at 10:00 a.m., Pacific Standard Time, on August 22, 2003,
or a date shortly thereafter at the offices of The Navellier Millennium Funds,
One East Liberty Street, Third Floor, Reno, Nevada 89501, and at any
adjournment(s) thereof (the "Meeting"). The Meeting is being held so that
shareholders can vote on the following proposal made by the Trustees of the
Millennium Portfolio:
PROPOSAL 1.
To approve a proposed Agreement and Plan of Reorganization (the
"Plan"), whereby the Millennium Portfolio would transfer all of its
assets to the Large Cap Growth Fund, a portfolio of the Touchstone
Strategic Trust (the "Acquiring Fund"), in a tax-free exchange for
shares of beneficial interest in the Acquiring Fund that would be
distributed to the shareholders of the Millennium Portfolio. Also, as
part of the Plan, the Acquiring Fund would assume all valid
liabilities of the Millennium Portfolio. Also, as part of the Plan,
the Navellier Large Cap growth Portfolio of the Navellier Performance
Funds (the "Portfolio") would transfer all of its assets and valid
liabilities to the Acquiring Fund.
The Millennium Portfolio is a series investment company organized by Louis
Navellier as a Business Trust in the State of Delaware with three classes of
common stock outstanding, with each such class representing an interest in a
separate series of the Fund. Only shareholders of the Millennium Portfolio are
being solicited in connection with the Meeting.
The purpose of the Meeting is to consider a proposed Plan of Reorganization
(the "Plan"), which would effect a merger of the Millennium Portfolio and also
the merger of the Portfolio into the Acquiring Fund, and the transactions
contemplated thereby, as described below (collectively, the "Reorganization").
The Acquiring Fund is a series open-end investment company which seeks capital
appreciation by investing in large cap growth securities. The Plan has been
approved unanimously by the Board of Trustees of the Portfolio, by the Board of
Trustees of the Millennium Portfolio and by the Board of Trustees of the
Acquiring Fund. Pursuant to the proposed Plan, all of the assets of the
Portfolio and all of the assets of the Millennium Portfolio would be acquired by
the Acquiring Fund (which, if the Reorganization is approved, will have
investment policies the same as those of the Millennium Portfolio), in a
tax-free exchange for shares of beneficial interest in the Acquiring Fund
("Acquiring Fund Shares") and the assumption by the Acquiring Fund of all valid
liabilities of the Portfolio and of the Millennium Portfolio. Specifically, it
is proposed that the assets of the Portfolio and the assets of the Millennium
Portfolio be transferred to the Acquiring Fund in a tax-free exchange for
Acquiring Fund Shares of value equal to the assets transferred from the
Portfolio and from the Millennium Portfolio. Following such transfer, the
Acquiring Fund Shares
1
received by the Millennium Portfolio would then be distributed pro rata to the
shareholders of the Millennium Portfolio, and then the Millennium Portfolio
would be liquidated. As a result of the proposed transactions, each shareholder
of the Millennium Portfolio would receive a number of full and fractional
Acquiring Fund Shares having a total net asset value equal, on the effective
date of the Reorganization, to the net asset value of the Shareholder's shares
of beneficial interest in the Millennium Portfolio. In order to have a merger,
the Trustees of the Portfolio and the Trustees of the Millennium Portfolio and
the Trustees of the Acquiring Fund must approve the proposed merger. The
Trustees of the Portfolio and of the Millennium Portfolio and the Trustees of
the Acquiring Fund have already approved the proposed merger.
This combined prospectus/proxy statement, which should be retained for
future reference, sets forth concisely the information about the Millennium
Portfolio and the Acquiring Fund, and the transactions contemplated by the
proposed Reorganization, that an investor should know before voting on the
proposed Reorganization. A copy of the current Prospectus of the Touchstone
Strategic Trust dated August 1, 2002 is included with this combined
prospectus/proxy statement for each Shareholder of the Millennium Portfolio, and
is incorporated by reference herein.
A Statement of Additional Information regarding Touchstone Strategic Trust
dated August 1, 2002 has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated by reference herein. Copies of such
Statement of Additional Information also may be obtained without charge by
contacting Touchstone Investments at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202, or by telephoning toll-free at 1-800-543-0407 or at
http://www.touchstoneinvestments.com.
A Prospectus and a Statement of Additional Information regarding the
Millennium Portfolio each dated May 1, 2003 also have been filed with the
Commission and each is incorporated by reference herein.
Copies of these Millennium Portfolio documents also may be obtained without
charge by contacting Navellier Management, Inc., at One East Liberty Street,
Third Floor, Reno, Nevada 89501, or by telephoning Navellier Management, Inc.,
toll-free at 1-800-887-8671.
A Statement of Additional Information dated July 18, 2003, relating to the
proposed transactions described in this combined prospectus/proxy statement,
including historical financial statements, has been filed with the Commission
and is incorporated by reference herein. Copies of this Statement of Additional
Information may be obtained without charge by contacting Navellier Management,
Inc., at One East Liberty Street, Third Floor, Reno, Nevada 89501, or by
telephoning Navellier Management, Inc., toll-free at 1-800-887-8671.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Combined Prospectus/Proxy Statement is July 18, 2003.
2
COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
---------
Introduction and Voting Information 6
Special Meeting; Voting of Proxies; Adjournment 6
Proxy Solicitation 7
Revocation of Proxies 7
No Dissenters' Rights of Appraisal 8
Additional Voting Information 8
Synopsis 8
The Proposed Reorganization 8
Investment Objectives and Policies 10
Operations of the Touchstone Strategic Trust and the Acquiring Fund following
the Reorganization 11
Management Fees, Administrative Fees, and Other Operating Expenses 11
Purchases and Exchanges 17
Redemption Procedures and Fees 18
Dividends and Distributions; Automatic Reinvestment 19
Federal Tax Consequences of the Proposed Reorganization 19
Costs and Expenses of the Reorganization 19
Continuation of Shareholder Accounts; Share Certificates 19
Form of Organization of the Touchstone Strategic Trust 20
Comparison of Investment Objectives and Policies 20
Investment Objectives and Policies 20
Investment Objective of the Acquiring Fund 20
Investment Objective of the Millennium Portfolio 21
Certain Investment Restrictions and Limitations 21
Principal Risk Factors 23
The Proposed Transactions 24
Proposed Agreement and Plan of Reorganization 24
Reasons for the Proposed Transactions 26
Description of Securities to Be Issued 28
Federal Income Tax Consequences 29
3
Pro Forma Capitalization and Ratios 30
Dissolution of the Portfolios 30
Navellier Group Recommendation 30
Required Vote *
Additional Information About the Acquiring Fund and the Acquiring Fund Shares 31
Additional Information About the Millennium Portfolio and the Millennium
Portfolio Shares 31
Miscellaneous 32
Available Information 32
Legal Matters 32
Financial Statements and Experts 32
Other Business 33
Appendix A: Form of Agreement and Plan of Reorganization 34
Appendix B: Investment Advisory Agreement Between Acquiring Fund and Touchstone
Advisors, Inc. 47
Appendix C: Sub-advisory Agreement between Touchstone Advisors, Inc. and
Navellier Management, Inc. 54
Appendix D: Acquiring Fund Distribution Agreement 59
4
PART A
5
SOLICITATION BY THE TRUSTEES OF
THE NAVELLIER MILLENNIUM FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
------------------------
THE NAVELLIER MILLENNIUM FUNDS
(THE NAVELLIER LARGE CAP GROWTH PORTFOLIO)
------------------------
COMBINED PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
August 22, 2003 OR A DATE SHORTLY THEREAFTER
------------------------
INTRODUCTION AND VOTING INFORMATION
SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT
This combined prospectus/proxy statement is being furnished to the
shareholders of The Navellier Millennium Funds' Navellier Large Cap Growth
Portfolio (the "Millennium Portfolio") in connection with the solicitation by
the Trustees of the Millennium Portfolio, (collectively "your Trustees") of
proxies to be used at a special meeting of the shareholders of this Millennium
Portfolio to be held on August 22, 2003 or a date shortly thereafter at 10:00
a.m. Pacific Standard Time at the offices of The Navellier Millennium Funds, One
East Liberty Street, Third Floor, Reno, Nevada 89501 and at any adjournment(s)
thereof (the "Meeting"). The purpose of the Meeting is to vote on the proposed
tax-free Reorganization (the "Plan") to merge the Millennium Portfolio into the
Large Cap Growth Fund (the "Acquiring Fund"), which is a series of the
Touchstone Strategic Trust, pursuant to the terms and conditions of the Plan, as
described below in greater detail. A vote on the approval or disapproval of the
Plan will be conducted at the Meeting by the shareholders of the Millennium
Portfolio.
Shareholders of record of the Millennium Portfolio at the close of business
on June 30, 2003 (the "Record Date") will be entitled to vote at the Meeting.
Such holders of shares of beneficial interest in the Millennium Portfolio (the
"Millennium Portfolio Shares") are entitled to one vote for each Millennium
Portfolio Share held and to fractional votes for fractional Millennium Portfolio
Shares held. A quorum for the Millennium Portfolio must be present in person or
represented by Proxy for the transaction of business at the Meeting. The holders
of record of one-third of the Millennium Portfolio Shares outstanding at the
close of business on that Record Date present in person or represented by proxy
will constitute a quorum for the Meeting of the Shareholders of the Millennium
Portfolio. A quorum being present, the approval at the Meeting by the
shareholders of the Millennium Portfolio for the proposed Reorganization
requires the affirmative vote of at least 67% of the outstanding shares of the
Millennium Portfolio present in person or represented by proxy at the Meeting if
more than 50% of the outstanding shares of the Millennium Portfolio are present
in person or represented by proxy or more than 50% of the outstanding shares
entitled to vote, whichever is less.
If either (i) a quorum is not present at the Meeting or (ii) a quorum is
present but sufficient votes in favor of a matter proposed at the Meeting (a
"Proposal"), as set forth in the Notice of this Meeting, are not received by
August 22, 2003, or a date
6
shortly thereafter, then the persons named as attorneys and proxies in the
enclosed proxy ("Proxies") may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of at least one-third of the shares present in person or by
proxy. The persons named as Proxies will vote those proxies that such persons
are required to vote FOR such Proposal in favor of such an adjournment and will
vote those proxies required to be voted AGAINST such Proposal against such an
adjournment. A Shareholder vote may be taken on a Proposal in this combined
prospectus/proxy statement prior to any such adjournment if sufficient votes
have been received and it is otherwise appropriate.
The individuals named as Proxies on the enclosed GOLD proxy card will vote
in accordance with your direction, as indicated thereon, if your proxy card is
received and is properly executed. If you properly execute your GOLD proxy and
give no voting instructions with respect to a Proposal, your shares will be
voted in favor of the Proposal. The duly-appointed Proxies, in their discretion,
may vote upon such other matters as may properly come before the Meeting. Your
Trustees are not aware of any other matters to come before the Meeting.
If a broker returns a "non-vote" proxy, indicating a lack of authority to
vote on the Plan, then the Millennium Portfolio Shares covered by such broker
non-vote shall be deemed present at the Meeting for the purposes of determining
a quorum, but shall not be deemed to be represented at the Meeting for the
purposes of calculating the number of Millennium Portfolio Shares present in
person or represented by proxy at the Meeting with respect to the Plan or any
other Proposal.
PROXY SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
representation of Shareholders, your Trustees also may solicit proxies by
telephone, telegraph, facsimile and/or personal interview by representatives of
the Millennium Portfolio, Mr. Navellier, Navellier Management, Inc., employees
of Navellier Management, Inc., or their affiliates, and by representatives of
any independent proxy solicitation service retained for the Meeting. Louis
Navellier and Navellier Management, Inc., whose principal location is One East
Liberty Street, Third Floor, Reno, Nevada 89501, will bear the costs of its
solicitation, including the costs such as the preparation and mailing of the
notice, the combined prospectus/proxy statement, and the proxy, and the
solicitation of proxies, including reimbursement to persons who forward proxy
materials to their clients, and the expenses connected with the solicitation of
these proxies in person, by telephone, or by telegraph. Banks, brokers, and
other persons holding Millennium Portfolio Shares registered in their names or
in the names of their nominees will be reimbursed for their expenses incurred in
sending proxy materials to and obtaining proxies from the beneficial owners of
such Millennium Portfolio Shares.
Mr. Navellier, as sole owner of Navellier Management, Inc., has a financial
interest in the outcome of the vote because Navellier Management, Inc. would be
investment sub-advisor to the merged Millennium Portfolio, for which it would
receive investment advisory fees.
REVOCATION OF PROXIES
You may revoke your proxy: (i) at any time prior to the proxy's exercise by
written notice to The Navellier Millennium Funds, One East Liberty Street, Third
Floor, Reno, Nevada 89501 prior to the Meeting; (ii) by the subsequent execution
and return of another proxy prior to the Meeting; or (iii) by being present and
voting in person at the Meeting and giving oral notice of revocation to the
Chairman of the Meeting.
7
NO DISSENTERS' RIGHTS OF APPRAISAL
The purpose of the Meeting is to vote on the proposed tax-free
Reorganization of the Millennium Portfolio into the Acquiring Fund, as described
below in greater detail. The Millennium Portfolio is a separate series of the
Navellier Millennium Funds. The Declaration of Trust of the Navellier Millennium
Funds (the "Declaration of Trust") does not entitle shareholders to appraisal
rights (i.e., to demand the fair value of their shares) in the event of a
reorganization or proposed merger. Consequently, the shareholders will be bound
by the terms of the Plan, if the Plan is approved at the Meeting. Any
Shareholder, however, may redeem his or her Millennium Portfolio Shares at net
asset value prior to the closing date of the proposed Reorganization.
ADDITIONAL VOTING INFORMATION
As of the Record Date, there were outstanding and entitled to be voted _____
Millennium Portfolio Shares. As of the Record Date __________, each held for the
benefit of others more than 5% of the Millennium Portfolio. Trustees and
officers of The Navellier Millennium Funds own in the aggregate less than 1% of
the shares of the Millennium Portfolio. To the knowledge of Mr. Navellier, no
other person then owned more than 5% of the outstanding shares of the Millennium
Portfolio.
As more fully described in this combined prospectus/proxy statement, the
Meeting has been called for the following purpose:
PROPOSAL 1.
To approve a proposed Agreement and proposed Plan of Reorganization
(the "Plan"), whereby the Millennium Portfolio would transfer all of
its assets to the Large Cap Growth Fund (the "Acquiring Fund") of the
Touchstone Strategic Trust in a tax-free exchange for shares of
beneficial interest in the Acquiring Fund that would then be
distributed to the shareholders of the Millennium Portfolio. Also, as
part of the Plan, the Navellier Large Cap Growth Portfolio of The
Navellier Performance Funds (the "Portfolio") would transfer all of
its assets to the Acquiring Fund in a tax-free exchange for shares of
beneficial interest in the Acquiring Fund that would then be
distributed to the Shareholders of the Portfolio. Also, as part of the
Plan, the Acquiring Fund would assume all valid liabilities of the
Portfolio and of the Millennium Portfolio.
As described below, if holders of more than 50% of the outstanding shares of
record are present in person or by proxy, the approval by the Millennium
Portfolio of Proposal 1 at the Meeting requires the affirmative vote of at least
67% of the Millennium Portfolio Shares present in person or represented by proxy
at the Meeting or the vote of more than 50% of the outstanding shares entitled
to vote, whichever is less.
MR. NAVELLIER AND THE OTHER TRUSTEES OF THE MILLENNIUM PORTFOLIO UNANIMOUSLY
RECOMMEND THAT THE PROPOSED REORGANIZATION DESCRIBED HEREIN BE "APPROVED."
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this combined prospectus/ proxy statement, including the prospectuses of the
Millennium Portfolio and the Acquiring Fund and the proposed Agreement and Plan
of Reorganization. Shareholders should read this entire combined
prospectus/proxy statement carefully.
THE PROPOSED REORGANIZATION
Shareholders of the Millennium Portfolio will be asked at the Meeting to
vote upon and approve the proposed Plan, which provides for the Reorganization
of the Millennium Portfolio. A copy of the form of the Plan is set forth in
Appendix A to this combined prospectus/proxy statement. Pursuant to the Plan,
the Millennium Portfolio, which is a series of The Navellier Millennium Funds, a
non-diversified, open-end management
8
investment company organized as a business trust under the laws of the State of
Delaware, would be merged tax-free into the Acquiring Fund of the Touchstone
Strategic Trust. Touchstone Large Cap Growth is currently a separate diversified
series of the Trust, a Massachusetts business trust, which as also an open-end
management investment company registered under the 1940 Act. However, if the
shareholders of the Touchstone Large Cap Growth approve a proposal in a proxy
statement to be filed with the Securities and Exchange Commission ('SEC') and
scheduled for a vote of such shareholders in a special meeting on August 22,
2003, upon completion of the Reorganization Touchstone Large Cap Growth will
change to a non-diversified series of the Trust. A non-diversified fund may
invest up to 25% of its total assets in the securities of a single company and
50% of its total assets could consist of the securities of only two issuers.
With respect to the remainder of the Fund's assets, no more than 5% could be
invested in any one security, and the Fund may not own more than 10% of the
outstanding voting securities of any issuer. The Portfolio would also be merged
into the Acquiring Fund. The Acquiring Fund is a loaded series of the TOUCHSTONE
STRATEGIC TRUST, an open-end management investment company organized under the
laws of the State of Massachusetts as a business trust. The Plan sets forth the
terms and conditions under which the proposed Reorganization may be consummated.
Approval by the present Trustees of the Millennium Portfolio is required in
order to merge the Millennium Portfolio into the Acquiring Fund. The present
Trustees of the Millennium Portfolio have approved the proposed merger.
If the Reorganization is completed, the investment objective and investment
strategies of Touchstone Large Cap Growth will be changed to those of the
Millennium Portfolio (subject to the approval of the shareholders of Touchstone
Large Cap Growth to change that Fund to a non-diversified fund upon completion
of the Reorganization), and the investment manager of the Touchstone Large Cap
Growth will change the investment sub-advisor of the Touchstone Large Cap Growth
to the investment manager of the Millennium Portfolio, Navellier Management,
Inc. This Prospectus/Proxy statement has been prepared assuming that such
changes will take place.
YOUR TRUSTEES BELIEVE THE PROPOSED REORGANIZATION PLAN SHOULD BE APPROVED.
The consummation of the proposed transactions contemplated by the Reorganization
is subject to a number of conditions set forth in the Plan, some of which
conditions may be waived by the Trustees. See "The Proposed
Transactions--Agreement and proposed Plan of Reorganization." Among the
significant conditions (which may not be waived) for the Reorganization are (i)
the receipt by each of the Funds of an opinion of counsel (or a revenue ruling
of the U.S. Internal Revenue Service) as to certain Federal income tax aspects
of the Reorganization (see "The Proposed Transactions--Federal Income Tax
Consequences") (that opinion of counsel has been received) and (ii) the approval
of the Plan by the affirmative vote of at least 67% of the Portfolio Shares and
at least 67% of the Millennium Portfolio Shares present in person or by proxy if
a quorum of shareholders is present or the holders of at least a majority of the
outstanding voting Shares of the Portfolio and of the Shares of the Millennium
Portfolio, whichever amount is less and (iii) approval of the proposed merger by
the Trustees of the Portfolio and of the Trustees of the Millennium Portfolio
(these conditions have also been satisfied). The Plan provides, with respect to
the Reorganization, for the acquisition of all the assets of the Portfolio and
all the assets of the Millennium Portfolio by the Acquiring Fund in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of all valid
liabilities of the Portfolio and of the Millennium Portfolio. The Acquiring Fund
Shares received by the Portfolio and the Acquiring Fund shares received by the
Millennium Portfolio then would be distributed pro rata to the Shareholders of
the Portfolio and to the Shareholders of the Millennium Portfolio respectively.
The outstanding Shares of the Portfolio would be cancelled and the Portfolio
would be liquidated. The outstanding Shares of the Millennium Portfolio would be
cancelled and the Millennium Portfolio would be liquidated. The Reorganization
is anticipated to occur on August 22, 2003, or such later date as the parties
may agree upon (the "Closing Date"). As a result of the proposed transactions
contemplated by the Reorganization, each portfolio shareholder would receive a
number of full and fractional shares of the corresponding Acquiring Fund having
a total net asset value equal in value to the net asset value of his or her
Shares in the Portfolio and/or the Millennium Portfolio as of the Closing Date
of the Reorganization.
9
The following sets forth the Millennium Portfolio and the corresponding
Acquiring Fund:
PORTFOLIO OF ACQUIRING FUND OF
THE NAVELLIER MILLENNIUM FUNDS TOUCHSTONE STRATEGIC TRUST
-------------------------------------------- -----------------------------------------
The Navellier Large Cap Growth Portfolio The Touchstone Large Cap Growth Fund
For the reasons set forth below under "The Proposed Transactions--Reasons
for the Proposed Transactions", the Trustees of the Millennium Portfolio, have
unanimously concluded that the Reorganization would be in the best interests of
the Millennium Portfolio and its shareholders and that the interests of existing
shareholders will not be diluted as a result of the transactions contemplated by
the Reorganization. The Millennium Portfolio Trustees, therefore, have submitted
the proposed Plan effecting the proposed Reorganization for approval by the
shareholders of the Millennium Portfolio at the Meeting and recommend a vote FOR
the proposed Plan.
INVESTMENT OBJECTIVES AND POLICIES
GENERAL. The investment objective of Touchstone Large Cap Growth will be
identical to that of the Millennium Portfolio and the investment strategies of
the Millennium Portfolio and Touchstone Large Gap Growth will be substantially
identical (assuming that Touchstone Large Cap Growth becomes a non-diversified
fund). Navellier Management, Inc., the investment adviser to the Millennium
Portfolio and sub-advisor in charge of managing the day to day investments of
the Acquiring Fund will use the same modern portfolio theory style of stock
selection for the Acquiring Fund that is used in the Millennium Portfolio.
The investment objective of the Millennium Portfolio is a fundamental policy
which may not be changed without the approval of a vote of at least a "majority"
(as that term is defined in the 1940 Act) of the outstanding shares,
respectively, of the Millennium Portfolio or the Acquiring Fund. All other
investment policies of the Millennium Portfolio that are not specified as
fundamental are not fundamental policies and may be changed by the Acquiring
Fund Board of Trustees and the Millennium Portfolio Board of Trustees,
respectively, without shareholder approval. The investment objective of the
Acquiring Fund is non-fundamental, which means that it may be changed by vote of
the Trustees without shareholder approval.
THE MILLENNIUM PORTFOLIO. The investment objective of the Millennium
Portfolio is to seek to achieve long term growth of capital primarily through
investments in securities of large cap companies (companies with market
capitalization of more than $5 Billion) with appreciation potential by employing
a modern portfolio theory to select securities.
The investment objective of the Acquiring Fund will be to seek to achieve
long term growth of capital primarily through investments in securities of large
cap companies (companies with market capitalization of more than $5 Billion)
with appreciation potential by employing a modern portfolio theory to select
securities.
The Acquiring Fund will have after the merger the same investment
sub-advisor (Navellier Management, Inc.) managing the day to day investments
which the Millennium Portfolio has and will employ the same modern portfolio
investment style which is used by the Millennium Portfolio.
For further discussion of the comparisons in the investment policies of the
Acquiring Fund and of the Millennium Portfolio, see "Comparison of Investment
Objectives and Policies" in this combined prospectus/proxy statement.
10
OPERATIONS OF TOUCHSTONE STRATEGIC TRUST AND THE ACQUIRING FUND FOLLOWING THE
REORGANIZATION
Touchstone Strategic Trust and the Acquiring Fund will continue to operate
in substantially the same way as each did prior to the Reorganization. The
responsibilities, powers and fiduciary duties of the Trustees of the Acquiring
Fund are essentially the same as those of the Trustees of the Millennium
Portfolio. Subject to the provisions of the Touchstone Strategic Trust
Declaration of Trust, dated November 18, 1982 (the "Trust Declaration"), the
business of Touchstone Strategic Trust and the Acquiring Fund is managed by the
Touchstone Strategic Trust Board of Trustees (the "Board"), which has all powers
necessary and appropriate to carry out that business responsibility. The Board
supervises the business affairs and investments of the Acquiring Fund. The
Acquiring Fund receives investment advisory services from Touchstone Advisors,
Inc. and will receive upon consummation of the Reorganization sub-advisory
investment services from Navellier Management, Inc. The Acquiring Fund receives
distribution, marketing and customer services from Touchstones Securities, Inc.
pursuant to a Distribution Plan (12b-1 Plan).
MANAGEMENT, FEES, ADMINISTRATIVE FEES, AND OTHER OPERATING EXPENSES
MANAGEMENT AND FEES. Navellier Management, Inc. is the investment advisor to
the Millennium Portfolio pursuant to an investment management agreement between
the Millennium Portfolio and Navellier Management, Inc. (the "Millennium
Portfolio Management Contract"). Touchstone Advisors, Inc. (the 'Manager') is
the investment manager for the Touchstone Large Cap Growth. The Manager selects
and pays the fees of the sub-advisor and monitors the sub-advisor's program.
Navellier Management, Inc. will manage the investment and reinvestment of the
assets of the Acquiring Fund, as sub-advisor after the Reorganization, subject
to the supervision of Touchstone Advisors, Inc. and of the officers and Trustees
of the Acquiring Fund. The Millennium Portfolio pays Navellier Management, Inc.
an investment advisory fee at an annual rate of 1.00% of the aggregate average
daily net asset value of the Millennium Portfolio. The Acquiring Fund will pay
to Touchstone Advisors, Inc. an investment advisory fee at an annual rate of
0.75% of the aggregate average daily net asset value of the Acquiring Fund.
Under the terms of the Sub-Advisory Agreement, Navellier Management, Inc. will
be paid a fee of 0.45% of average daily net assets by the Manager, Touchstone
Advisors, Inc. The Acquiring Fund does not pay a fee to the sub-advisor.
The Trust and the Manager have received an order from the SEC whereby under
certain circumstances, the Manager may select or change sub-advisors, enter into
new-sub-advisory agreements or amend existing sub-advisory agreements without
first obtaining shareholder approval. Pursuant to this order, upon completion of
the Reorganization, the Manager will change the sub-advisor of the Touchstone
Large Cap Growth to the Advisor of the Millennium Portfolio.
ADMINISTRATIVE FEES AND OTHER OPERATING EXPENSES. The Millennium Portfolio
pays its own operating costs. Pursuant to an Administrative Services Agreement,
the Millennium Portfolio pays Navellier Management, Inc. an annual fee, pro rata
monthly, of 0.25% of the aggregate average daily net asset value of the
Millennium Portfolio to provide administrative services including shareholder
servicing services to the Millennium Portfolio. Its net operating expenses in
2002 were 1.50%. The Acquiring Fund pays it own operating expenses. Its net
operating expenses for the period ending December 31, 2003 were 1.37% for Class
'A' shares, 2.43% for Class 'B' shares, and 2.54% for Class 'C' shares.
12b-1 PLAN FEES. The Millennium Portfolio is allowed to pay fees to the
Distributor and others for promoting, selling, distributing, and/or servicing
its shares. These are commonly called '12b-1 fees.' Payments are made monthly
and can be up to 0.25% annually of the Portfolio's average daily net assets for
Class A shares and up to 1.00% annually of the Portfolio's average daily net
assets for Class B and Class C shares.
The Acquiring Fund has a Plan of Distribution under which Class A, B, and C
shares may directly incur or reimburse the Advisor for expenses related to the
distribution and
11
promotion of shares. The annual limitation for payment of such expenses under
the Plan is 0.25%, 1.00%, and 1.00% for Class A, B, and C shares, respectively,
of average daily net assets attributable to Class A, B, and C shares.
The following sets forth the fund operating expenses for Class A, B, and C
shares(as a percentage of the average daily net assets) for the Millennium
Portfolio for the twelve-month period ended December 31, 2002. Adjacent to the
column for Millennium Portfolio expenses is presented the expected fund
operating expenses (as a percentage of the average daily net assets) of the
Acquiring Fund into which the Millennium Portfolio would merge under the Plan.
CLASS A SHARES
Navellier Touchstone
Touchstone Millennium Large Combined
Large Cap Growth Cap Growth Pro Forma (1)
Expense (A) (A) (A)
- ---------------------------- ---------------- ---------------- -------------
Management Fees 0.75% 1.00% 0.75%
Distribution 0.25% 0.25% 0.25%
Other Expenses 0.40% 14.15% 0.50%
Total Fund Expense 1.40% 15.40% 1.50%
Waiver - -13.90% -0.20%
Net Expense - 1.50% 1.30%
CLASS B SHARES
Navellier Touchstone
Touchstone Millennium Large Combined
Large Cap Growth Cap Growth Pro Forma (2)
Expense (B) (B) (B)
- ---------------------------- ---------------- ---------------- ---------------
Management Fees 0.75% 1.00% 0.75%
Distribution 1.00% 1.00% 1.00%
Other Expenses 56.91% 14.15% 4.98%
Total Fund Expense 58.66% 16.15% 6.73%
Waiver - -13.90% -4.48%
Net Expense - 2.25% 2.25%
CLASS C SHARES
Navellier Touchstone
Touchstone Millennium Large Combined
Large Cap Growth Cap Growth Pro Forma (2)
Expense (C) (C) (C)
- ---------------------------- ---------------- ---------------- -------------
Management Fees 0.75% 1.00% 0.75%
Distribution 1.00% 1.00% 1.00%
Other Expenses 1.98% 14.15% 2.18%
Total Fund Expense 3.73% 16.15% 3.93%
Waiver - -13.90% -1.68%
Net Expense - 2.25% 2.25%
12
(1) Touchstone Advisors, Inc. and the Trust have entered into an Expense
Limitation Agreement whereby the Total Annual Portfolio Operating
Expenses of the Touchstone Large Cap Growth for the Class A shares will
not exceed 1.30%, Class B will not exceed 2.43%, and Class C shares will
not exceed 2.51% for the period ending upon consummation of the
Reorganization and will not exceed 1.30%, 2.25%, and 2.25% for Class A,
B, and C shares, respectively, for a two year period after consummation
of the Reorganization. Prior to the Reorganization, the limitation is
voluntary and can be terminated upon 30 days prior written notice at the
end of any calendar quarter. After reimbursements, the Total Annual Fund
Operating Expenses of Touchstone Large Cap Growth for the period ended
December 31, 2002 were 1.37% for Class A shares, 2.43% for Class B
shares, and 2.54% for C shares.
As reflected above, it is expected that Class A shares of the Acquiring Fund
will have lower total operating expenses than those historically incurred by the
Millennium Portfolio Class A shares. It is expected that Class B and C shares of
the Acquiring Fund will have the same total operating expenses of those
historically incurred by the Millennium Portfolio. Due to small relative size of
assets in the Class B and C shares of Millennium Portfolio significant waivers
and subsidies have been historically required to limit total net operating
expenses. Mr. Navellier believes that the lower management fee charged to the
Acquiring Fund and avoiding or reducing costs by merging the Millennium
Portfolio into the Acquiring Fund will save the Millennium Portfolio in excess
of $50,000 per year by reducing the fees paid to trustees, outside counsel to
the independent trustees, reducing printing and mailing and reduced management
fees, and that the Reorganization would be advantageous to and in the best
interests of the Shareholders. See "The Proposed Transactions--Reasons for the
Proposed Transactions".
FEE EXAMPLE
The tables below show examples of the total expenses you would pay on a
$10,000 investment over one-, three-, five- and ten-year periods. The examples
are intended to help you compare the cost of investing in the Millennium
Portfolio versus Touchstone Large Cap Growth and Touchstone Large Cap Growth
(Pro Forma), assuming the Reorganization takes place. The examples assume a 5%
average annual return, that you redeem all of your shares at the end of each
time period and that you reinvest all of your dividends. The following tables
also assume that total annual operating expenses remain the same throughout all
periods, and for the Touchstone Large Cap Growth Combined Pro Forma, are limited
for the first two years following consummation of the Reorganization and
thereafter, are not limited. The examples are for illustration only, and your
actual costs may be higher or lower.
CLASS A SHARES
TOUCHSTONE LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$719 $1,021 $1,345 $2,260
NAVELLIER MILLENNIUM LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$640 $1,099 $1,583 $2,915
TOUCHSTONE LARGE CAP GROWTH COMBINED PRO FORMA
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$700 $984 $1,309 $2,227
13
CLASS B SHARES
TOUCHSTONE LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$1,067 $2,167 $3,323 $6,176
NAVELLIER MILLENNIUM LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$728 $1,261 $1,719 $3,024
TOUCHSTONE LARGE CAP GROWTH COMBINED PRO FORMA
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$645 $1,399 $2,667 $5,785
CLASS C SHARES
TOUCHSTONE LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$395 $1,197 $2,017 $4,145
NAVELLIER MILLENNIUM LARGE CAP GROWTH
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$328 $861 $1,519 $3,282
TOUCHSTONE LARGE CAP GROWTH COMBINED PRO FORMA
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$245 $912 $1,757 $3,948
PERFORMANCE
The following charts show how the shares of the Millennium Portfolio and
the shares of Touchstone Large Cap Growth have performed in the past. Past
performance is not an indication of future results.
YEAR-BY-YEAR TOTAL RETURN
The charts below show the percentage gain or loss for the shares of the
Millennium Portfolio and Touchstone Large Cap Growth in each full calendar year
since the inception of each Portfolio on September 5, 2000 and August 2, 1993,
respectively. The charts should give you a general idea of the risks of
investing in the Portfolios by showing how a portfolio's return has varied from
year-to-year. The charts include the effects of Portfolio expenses. Total return
amounts are based on the inception date of the Portfolio which may have occurred
before your investment began; accordingly, your investment results may differ.
The Portfolios can also experience short-term performance swings as indicated in
the high and low quarter information at the bottom of each chart. The
information provided for the Millennium Portfolio is for the initial Class
(Class A shares) and does not reflect sales charges which reduce returns.
14
Navellier Millennium Large Cap Growth
2001 2002
- ------------------------ ---------------------
-26.16% -25.44%
Highest Quarter: 4th Quarter 2001, up 10.70%
Lowest Quarter: 1st Quarter 2001, down 24.38%
The information provided for the Acquiring Fund is for Class A shares. The chart
does not reflect any sales charges. Sales charges will reduce return.
Touchstone Large Cap Growth
1994 1995 1996 1997 1998 1999 2000 2001 2002
- ------------ -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
-1.67% 32.07% 14.26% 29.34% 21.90% 18.53% -19.50% -23.20% -36.16%
Highest Quarter: 4th Quarter 1998, up 20.28%
Lowest Quarter: 1st Quarter 2001, down 22.72%
The following table shows the after-tax returns calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Actual after-tax returns depend on an
investor's tax situation and may differ from those shown. The loss (if any) in
the "Return after taxes on distributions and sale of fund shares" column above
may be less than that shown in the "Return after taxes on distributions only"
column because it is assumed that the shareholder is subject to the highest
federal marginal tax rates. The after-tax returns shown are not relevant to
investors who hold their fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts. The index's returns reflect no
deduction for fees, expenses, or taxes. The Fund's past performance, before and
after taxes, is not necessarily an indication of how the Fund will perform in
the future.
The information provided for the Millennium Portfolio is for the initial Class
(Class A shares). The information provided for the Acquiring Fund is for Class A
shares.
Return after taxes
Return after taxes on distributions
Return on distributions and sale of fund Russell 100
Before taxes only shares Growth Index
- -------------------------------------- -------------------- -------------------- --------------------- --------------------
Millennium Large Cap Growth
Portfolio A Shares
One Year -29.10% -29.10% -17.60% -27.89%
Since Inception -33.18% 33.18% -24.95% *-31.50%
Touchstone Large Cap Growth
Class A Shares
One Year -36.16% -39.84% -24.46% -27.89%
Five Year -10.63% -12.39% - 8.11% - 3.84%
Since Inception 0.97% - 0.50% 0.57% **7.62%
* Date of Index performance is from 09/05/2000.
** Date of Index performance is from 08/01/1993.
15
The next table lists the average annual total return of Class A, B, and C
shares of the Millennium Portfolio for the past one year and since inception
(through December 31, 2002) and of Touchstone Large Cap Growth for the past one
year for Class A, B, and C shares and five years for Class A and C shares, and
since inception for all Classes (through December 31, 2002). This table includes
the effects of Portfolio expenses and is intended to provide you with some
indication of the risks of investing in each Portfolio by comparing its
performance with an appropriate widely recognized index of securities, a
description of which can be found following the tables. An index does not
reflect fees or expenses. It is not possible to invest directly in an index.
Average Annual Total Return (for the period ended 12/31/2002)(1)
CLASS A SHARES
1 Year Ended 5 Years Ended From Inception Inception
Class A Shares 12/31/02 12/31/02 to 12/31/02 Date
------------------------------- ------------------ ------------------ ----------------- ------------------
Navellier Millennium Large -25.44% - -33.18% 09/5/2000
Cap Growth
Touchstone Large -36.16% -10.63% 0.97% 08/02/1993
Cap Growth
S&P 500 Index -22.10% - 0.59% *-19.70%
**9.38%
Russell 1000 Growth Index -27.89% - 3.84% *-31.84%
**7.62%
* Date of Index performance is from 09/01/2000.
** Date of Index performance is from 08/01/1993.
CLASS B SHARES
1 Year Ended From Inception Inception
Class B Shares 12/31/02 to 12/31/02 Date
------------------------------- ------------------ ---------------- -------------------
Navellier Millennium Large -26.21% -30.60% 10/03/2000
Cap Growth
Touchstone Large -36.76% -29.33% 05/01/2001
Cap Growth
S&P 500 Index -22.10% *-19.70%
**-17.67%
Russell 1000 Growth Index -27.89% *-31.84%
**-23.15%
* Date of Index performance is from 09/01/2000.
** Date of Index performance is from 05/01/2001.
CLASS C SHARES
1 Year Ended 5 Years Ended From Inception Inception
Class C Shares 12/31/02 12/31/02 to 12/31/02 Date
------------------------------- ------------------ ------------------ ----------------- ------------------
Navellier Millennium Large -26.02% - -31.78% 09/26/2000
16
Cap Growth
Touchstone Large -36.86% -11.59% 0.05% 08/07/1993
Cap Growth
S&P 500 Index -22.10% - 0.59% *-19.70%
**9.38%
Russell 1000 Growth Index -27.89% - 3.84% *-31.84%
**7.62%
* Date of Index performance is from 09/01/2000.
** Date of Index performance is from 08/01/1993.
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses for certain periods. Without such reimbursements and/or waivers, the
average annual total returns during the periods would have been lower.
----------------------------
The S&P 500 Index is a widely recognized unmanaged index that measures the
stock performance of 500 large- and medium-sized companies and is often used to
indicate the performance of the overall stock market.
The Russell 1000 Growth Index is a widely recognized unmanaged index that
measures the stock performance of the Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values.
For a detailed discussion of the manner of calculating total return, please
see the Portfolios' Statements of Additional Information. Generally, the
calculations of total return assume the reinvestment of all dividends and
capital gain distributions on the reinvestment date and the deduction of all
recurring expenses that were charged to shareholders' accounts.
Important information about Touchstone Large Cap Growth is also contained
in management's discussion of Touchstone Large Cap Growth's performance. This
information also appears in the most recent Annual Report of the Trust relating
to Touchstone Large Cap Growth.
Upon consummation of the Reorganization, Touchstone Large Cap Growth will
assume and publish the performance history of Navellier Performance Large Cap
Growth.
PURCHASES AND EXCHANGES
Acquiring Fund Shares are sold in a continuous offering and are offered to
the public, and may be purchased through securities dealers or directly from the
Acquiring Fund's underwriter, Touchstone Securities, Inc.
In the proposed Reorganization, Millennium Portfolio shareholders
will receive shares of the Acquiring Fund having the same class designation and
the same arrangements with respect to the imposition of Rule 12b-1 distribution
and service fees as the shares they currently hold. Because the Reorganization
will be effected at net asset value without the imposition of a sales charge,
Millennium Portfolio shareholders will receive the Acquiring Fund shares without
paying any front-end sales charge or CDSC as a result of the Reorganization.
Acquiring Fund Class B and Class C shares received by Millennium Portfolio
shareholders as a result of the Reorganization will continue to be subject to a
CDSC upon subsequent redemption, but the CDSC will be based on the date of the
original purchase of Millennium Portfolio shares and will be subject to the CDSC
schedule applicable to Millennium Portfolio Fund shares on the date of the
original purchase of such shares.
17
The following is a summary description of charges and fees for the
Class A, Class B, and Class C shares of the Acquiring Fund which will be
received by Millennium Portfolio shareholders in the Reorganization. More
detailed descriptions of the distribution arrangements applicable to the classes
of shares are contained in each Fund's prospectus(es) and statement of
additional information.
Class A Shares. Class A shares are sold at net asset value plus a
front-end initial sales charge of up to 5.75% of the offering price and, as
indicated below, are subject to distribution-related fees. For a description of
the front-end sales charge applicable to the purchase of Class A shares see
"Choosing a Class of Shares" in the prospectus of the Acquiring Fund. No
front-end sales charge will be imposed on Class A shares of The Acquiring Fund
received by Millennium Portfolio shareholders as a result of the Reorganization.
Class B Shares. Class B shares are sold without a front-end sales
charge but are subject to a CDSC, which ranges from 5.00% to 1.00% if shares are
redeemed during the first six years after purchase. In addition, Class B shares
are subject to distribution-related fees and shareholder servicing-related fees
described below. Class B shares convert to Class A shares after eight years
following purchase. For purposes of determining when Class B shares issued in
the Reorganization to shareholders of Millennium Portfolio will convert to Class
A shares, such shares will be deemed to have been purchased as of the date the
Class B shares of Millennium Portfolio were originally purchased.
Class B shares are subject to higher distribution-related and
shareholder servicing-related fees than the corresponding Class A shares on
which a front-end sales charge is imposed (until they convert to Class A
shares). The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares of the Fund.
Class C Shares. Class C shares are sold at net asset value without a
front-end sales charge, and, as indicated below, are subject to
distribution-related and shareholder servicing-related fees. Class C shares are
subject to a 1.00% CDSC if such shares are redeemed within one year after
purchase. Class C shares issued to shareholders of Millennium Portfolio in
connection with the Reorganization will continue to be subject to the CDSC
schedule in place at the time of their original purchase. Class C shares incur
higher distribution-related and shareholder servicing-related fees than Class A
shares, but unlike Class B shares, do not convert to any other class of shares.
The Acquiring Fund currently offers an exchange privilege, including
telephone exchange privileges, which, subject to certain restrictions, permit
shares of any of the other portfolios of the Touchstone Strategic Trust to be
exchanged for shares of the Acquiring Fund. These exchanges are based upon each
portfolio's net asset value per share next computed following receipt of a
properly-executed exchange request without any sales charge. These exchanges
also may be made only between identically-registered accounts, and these
exchange privileges also are available only in states where the shares to be
acquired may be legally sold. If the proposed merger does not occur, Millennium
Portfolio shareholders will not be able to exchange their Millennium Portfolio
shares for shares of any series of the Touchstone Strategic Trust. Except for
the foregoing, there would be no material differences between the exchange
privileges which shareholders of the Millennium Portfolio currently have and the
exchange privileges which such shareholders will have as shareholders of the
Acquiring Fund upon effectiveness of the Reorganization.
The Acquiring Fund has reserved the right to reject or refuse, at Acquiring
Fund's discretion, any order for the purchase of its shares in whole or in part.
REDEMPTION PROCEDURES AND FEES
18
Acquiring Fund Shares may be redeemed at a redemption price equal to the net
asset value of the shares as next computed following the receipt of a request
for redemption in proper form. Payment of redemption proceeds for redeemed
Acquiring Fund Shares ordinarily are made within seven days after receipt of a
redemption request in proper form and documentation. Shares of the Acquiring
Fund may be redeemed without charge.
DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC REINVESTMENT
The Acquiring Fund and the Millennium Portfolio each declares and pays
dividends from the net investment income and short-term capital gains, if any,
to shareholders. The Millennium Portfolio pays dividends annually during
December of each year and distributes long-term capital gains, if any, to
shareholders on an annual basis in December. The Acquiring Fund pays dividends
quarterly and pays capital gains, if any, at least annually.
The income dividends and capital gains distributions for investors in the
Acquiring Fund and in the Millennium Portfolio are each automatically
reinvested, without sales charge, in additional shares of the Acquiring Fund and
of the Millennium Portfolio respectively at the applicable net asset value of
such shares calculated on the ex-dividend date unless such an investor has
requested otherwise in writing.
FEDERAL TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION
The Acquiring Fund and the Millennium Portfolio have received, as a
condition to the Reorganization, opinions of legal counsel, to the effect, for
Federal income tax purposes, that the proposed Reorganization will constitute a
tax-free reorganization within the meaning of Section 368(a)(1)(C) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, it is
believed that no gain or loss generally will be recognized by Touchstone
Strategic Trust or by the Acquiring Fund, by the Navellier Millennium Funds or
by the Millennium Portfolio, or by their respective shareholders (see "The
Proposed Transactions--Federal Income Tax Consequences").
COSTS AND EXPENSES OF THE REORGANIZATION
Navellier Management, Inc. will pay the costs, expenses, and professional
fees incurred in the preparation and mailing of this notice and this combined
prospectus/proxy statement and the proxy, and in the solicitation of proxies,
which may include reimbursement to broker-dealers and others who forward proxy
materials to their clients and the costs of a professional solicitation firm.
See "Introduction and Voting Information--Proxy Solicitation".
CONTINUATION OF SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES
As a result of the proposed transactions contemplated by the Reorganization
of the Millennium Portfolio into the Acquiring Fund, Shareholders would cease to
be shareholders of the Millennium Portfolio and would receive on the books of
the Acquiring Fund, that number of full and fractional Acquiring Fund Shares
having an aggregate net asset value equal to the aggregate net asset value of
his or her Millennium Portfolio Shares as of the close of business on the
Closing Date.
The Acquiring Fund will establish accounts on the Closing Date for
Shareholders which will contain the appropriate number of Acquiring Fund Shares.
Acceptance of Acquiring Fund Shares by a Shareholder will be deemed to be
authorization of the Acquiring Fund and its agents to establish, with respect to
the Acquiring Fund, all of the account options, including telephone redemptions,
if any, and dividend and distribution options, as have been established for the
Shareholder's Portfolio account. Shareholders who are receiving payments under
an Automatic Investment Plan, with respect to Millennium Portfolio Shares, will
retain the same rights and privileges as to Acquiring Fund Shares under such an
Automatic Investment Plan after the Reorganization. Similarly, no further action
will be necessary in order to continue, with respect to Acquiring Fund Shares,
any retirement plan currently maintained by a Shareholder with respect to
Millennium Portfolio Shares.
19
As a series of a Massachusetts business trust, the Acquiring Fund will not
issue certificates evidencing ownership of the Acquiring Fund Shares.
Shareholders of the Millennium Portfolio will have their beneficial interests in
the Millennium Portfolio cancelled on the books of the Millennium Portfolio in
order to receive the Acquiring Fund Shares on the books of Acquiring Fund as a
result of the Reorganization.
No sales or other charges will be imposed in connection with the issuance of
Acquiring Fund Shares to Millennium Portfolio Shareholders pursuant to the
Reorganization.
FORM OF ORGANIZATION OF TOUCHSTONE STRATEGIC TRUST
Touchstone Strategic Trust is an unincorporated voluntary association
organized under the laws of the State of Massachusetts as a business trust
pursuant to the Declaration of Trust. The operations of Touchstone Strategic
Trust and the Acquiring Fund (a Portfolio of Touchstone Strategic Trust) are
governed by this Declaration of Trust, by Touchstone Strategic Trust's By-Laws,
and by Massachusetts Law, as applicable. The Navellier Millennium Funds is an
unincorporated voluntary association organized under the laws of the State of
Delaware as a business trust. The operations of The Navellier Millennium Funds
and the Millennium Portfolio are governed by The Navellier Millennium Funds'
Declaration of Trust dated September 9, 1998, and by Delaware law, as
applicable. Both Touchstone Strategic Trust and The Navellier Millennium Funds,
as well as their series investment portfolios, are subject to the provisions of
the 1940 Act and to the rules and regulations of the Commission thereunder.
Touchstone Strategic Trust is authorized to issue an unlimited number of shares
of beneficial interest in one or more series investment portfolios or funds.
Currently, Touchstone Strategic Trust is composed of seven (7) separate
investment portfolios: the International Equity Fund, the Emerging Growth Fund,
the Growth Opportunities Fund, the Large Cap Growth Fund, the Enhanced 30 Fund,
the Value Plus Fund, and the Small Cap Growth Fund ("the Portfolios"). See "The
Proposed Transactions--Description of Securities to Be Issued".
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
As discussed below, the investment objective and policies of the Acquiring
Fund and the Millennium Portfolio are essentially the same (subject to the
approval of the shareholders of Touchstone Large Cap Growth to change the Fund
to a non-diversified fund upon completion of the Reorganization). The Comparison
of Investment Objectives and Policies has been prepared assuming such change
takes place.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL. The Acquiring Fund and the Millennium Portfolio each invest in the
common stocks of large cap companies (companies with market capitalization of
more than $5 Billion).
INVESTMENT OBJECTIVE OF THE ACQUIRING FUND
The Investment Objective of the Acquiring Fund is and will be to achieve
long-term growth of capital primarily through investment in large cap companies
with appreciation potential. The Acquiring Fund invests in securities traded in
the United States securities markets of domestic issuers and of foreign issuers.
After the Reorganization, the sole objective of the Acquiring Fund is to seek to
achieve long term growth of capital primarily through investments in securities
of large cap companies (companies with market capitalization of more than $5
Billion) with appreciation potential by applying the proprietary modern
portfolio theory techniques of Navellier Management, Inc. There can be no
assurance that the Acquiring Fund will achieve its investment objectives. The
Acquiring Fund's investment objectives may be changed without shareholder
approval subject to 60 days notice to shareholders. The Acquiring Fund should
not be considered suitable for investors seeking current income.
20
INVESTMENT OBJECTIVE OF THE MILLENNIUM PORTFOLIO
The investment objective of the Millennium Portfolio is the same as the
investment objective of the Acquiring Fund. The Millennium Portfolio's
investment objective is to achieve long-term growth of capital primarily through
investment in large cap companies with appreciation potential. The Millennium
Portfolio invests in securities traded in the United States securities markets
of domestic issuers and of foreign issuers. The sole objective of the Millennium
Portfolio is to seek to achieve long term growth of capital primarily through
investments in securities of large cap companies (companies with market
capitalization of more than $5 Billion) with appreciation potential. There can
be no assurance that the Millennium Portfolio will achieve its investment
objectives. The Millennium Portfolio's investment objectives may not be changed
without shareholder approval. The Millennium Portfolio should not be considered
suitable for investors seeking current income.
OTHER INVESTMENTS. Both the Acquiring Fund and the Millennium Portfolio may,
for temporary defensive purposes or to maintain cash or cash equivalents to meet
anticipated redemptions, also invest in debt securities and money market funds
if, in the opinion of the investment advisor, such investment will further their
cash needs or temporary defensive needs. In addition, when the investment
advisor feels that market or other conditions warrant it, for temporary
defensive purposes, both the Acquiring Fund and the Millennium Portfolio may
retain cash or invest all or any portion of their assets in cash equivalents,
including money market mutual funds. Under normal conditions, both the Acquiring
Fund's and Millennium Portfolio's holdings in such non-equity securities should
not exceed 20% of the total assets of such fund.
CERTAIN INVESTMENT RESTRICTIONS AND LIMITATIONS
The investment restrictions and limitations of Acquiring Fund and those of
the Millennium Portfolio are substantially the same (subject to the approval of
the shareholders of Touchstone Large Cap Growth to change that Fund to a
non-diversified fund upon completion of the Reorganization). Unless otherwise
specified, the investment restrictions and limitations are considered to be
"fundamental" policies, and, as such, may not be changed without approval of the
holders of a "majority" (as that term is defined in the 1940 Act) of Acquiring
Fund's or Millennium Portfolio's respective outstanding shares.
The Millennium Portfolio may not:
1. Purchase securities of any issuer, other than
obligations issued or guaranteed as to principal and interest by the
United States government or its agencies or instrumentalities, if
immediately thereafter (i) more than 5% of the Portfolio's total
assets (taken at market value) would be invested in the securities
of such issuer, or (ii) more than 10% of the voting securities of
any class of such issuer would be held by the Portfolio. [Conflict
with the non-diversified status of Navellier Millennium Large Cap
Growth?]
2. Concentrate the Millennium Portfolio investments in
any one industry. To comply with this restriction, no security may
be purchased for the Acquiring Fund or the Millennium Portfolio if
such purchase would cause the value of the aggregate investment of
the Millennium Portfolio in any one industry to be 25% or more of
the Millennium Portfolio's total assets (taken at market value).
3. Purchase any securities or other property on margin,
or engage in short sales of securities (unless it owns, or by virtue
of its ownership of other securities has the right to obtain without
payment of any additional consideration securities equivalent in
kind and amount to the securities sold); PROVIDED, HOWEVER, that the
Millennium Portfolio may obtain short-term credit as may be
necessary for the clearance of purchases and sales of securities.
21
4. Make cash loans, except that the Millennium Portfolio
may purchase bonds, notes, debentures, or similar obligations which
are customarily purchased by institutional investors whether
publicly distributed or not.
5. Make securities loans, except that the Millennium
Portfolio may make loans of the securities of the Millennium
Portfolio, provided that the market value of the securities subject
to any such loans does not exceed 33 1/3% of the value of the total
assets (taken at market value) of the Millennium Portfolio.
6. Make investments in real estate or commodities or
commodity contracts, including futures contracts, although the
Millennium Portfolio may purchase securities of issuers which deal
in real estate or commodities even though this is not a primary
objective of the Millennium Portfolio but only if such securities
are large cap equity securities or constitute less than 20% of the
Millennium Portfolio's total assets.
7. Invest in oil, gas, or other mineral exploration or
development programs, although the Millennium Portfolio may purchase
securities of issuers which engage in whole or in part of such
activities, but only if such securities are large cap equity
securities or constitute less than 20% of the Millennium Portfolio's
total assets.
8. Invest in or sell puts, calls, straddles, and any
combination thereof.
9. Purchase securities of companies for the purpose of
exercising management or control.
10. Participate in a joint or joint and several trading
account in securities.
11. Purchase the securities of (i) other open-end
investment companies, or (ii) closed-end investment companies.
12. Issue senior securities or borrow money, except that
Acquiring Fund and Millennium Portfolio may (i) borrow money only
from banks for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests, that might otherwise
require the untimely disposition of securities, provided that any
such borrowing does not exceed 10% of the value of the total assets
(taken at market value) of the Millennium Portfolio, and (ii) borrow
money only from banks for investment purposes, provided that (a)
after each such borrowing, when added to any borrowing described in
clause (i) of this paragraph, there is an asset coverage of at least
300% as defined in the Investment Company Act of 1940, and (b) is
subject to an agreement by the lender that any recourse is limited
to the assets of the Millennium Portfolio with respect to which the
borrowing has been made. The Millennium Portfolio may not invest in
securities while the amount of its borrowing exceeds 5% of its total
assets.
13. Pledge, mortgage, or hypothecate its assets to an
extent greater than 10% of its total assets to secure borrowings
made pursuant to the provisions of Item 12 above.
The following investment restrictions are "fundamental policies" of
the Acquiring Fund and may not be changed with respect to the Acquiring Fund
without the approval of a "majority of the outstanding voting securities" of the
Acquiring Fund. "Majority of the outstanding voting securities" under the 1940
Act, and as used in the Statement of Additional Information and the Prospectus,
means, the lesser of (i) 67% or more of the outstanding voting securities of a
Fund present at a meeting if the holders of more than 50% of the outstanding
voting securities of a Fund are present or represented by proxy or (ii) more
than 50% of the outstanding voting securities of the Acquiring Fund.
22
THE FUNDAMENTAL LIMITATIONS APPLICABLE TO THE ACQUIRING FUND ARE:
1. BORROWING MONEY. The Acquiring Fund may not engage in borrowing
except as permitted by the Investment Company Act of 1940, any rule,
regulation or order under the 1940 Act or any SEC staff
interpretation of the 1940 Act.
2. UNDERWRITING. The Acquiring Fund may not underwrite securities
issued by other persons, except to the extent that, in connection
with the sale or disposition of portfolio securities, the Acquiring
Fund may be deemed to be an underwriter under certain federal
securities laws or in connection with investments in other
investment companies.
3. LOANS. The Acquiring Fund may not make loans to other persons
except that the Acquiring Fund may (1) engage in repurchase
agreements, (2) lend portfolio securities, (3) purchase debt
securities, (4) purchase commercial paper, and (5) enter into any
other lending arrangement permitted by the Investment Company Act of
1940, any rule, regulation or order under the Act or any SEC staff
interpretation of the Act.
4. REAL ESTATE. The Acquiring Fund may not purchase or sell real
estate except that the Acquiring Fund may (1) hold and sell real
estate acquired as a result of the Acquiring Fund's ownership of
securities or other instruments (2) purchase or sell securities or
other instruments backed by real estate or interests in real estate
and (3) purchase or sell securities or entities or investment
vehicles, including real estate investment trusts that invest, deal
or otherwise engage in transactions in real estate or interests in
real estate.
5. COMMODITIES. The Acquiring Fund will not purchase or sell
physical commodities except that the Acquiring Fund may (1) hold and
sell physical commodities acquired as a result of the Acquiring
Fund's ownership of securities or other instruments, (2) purchase or
sell securities or other instruments backed by physical commodities,
(3) purchase or sell options, and (4) purchase or sell futures
contracts.
6. CONCENTRATION OF INVESTMENTS. The Acquiring Fund may not purchase
the securities of an issuer (other than securities issued or
guaranteed by the United States Government, its agencies or its
instrumentalities) if, as a result, more than 25% of the Acquiring
Fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry.
7. SENIOR SECURITIES. The Acquiring Fund my not issue senior
securities except as permitted by the Investment Company Act of
1940, any rule, regulation or order under the Act or any SEC staff
interpretation of the Act.
PRINCIPAL RISK FACTORS
The principal risks associated with an investment in the Portfolio and an
investment in the Acquiring Fund are:
An investment in shares of the Acquiring Fund involves certain speculative
considerations. There can be no assurance that any of the Acquiring Fund's
objectives will be achieved or that the value of the investment will increase.
An investment in shares of the Millennium Portfolio also involves the same
risks.
All securities in which the Acquiring Fund may invest are inherently subject
to market risk, and the market value of the Acquiring Fund's investments will
fluctuate. The Millennium Portfolio is subject to the same risks.
23
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. Navellier Management, Inc.
will use the same basic selection criteria for investing in foreign securities
as it uses in selecting domestic securities.
While, to some extent, the risks to the Acquiring Fund of investing in
foreign securities may be limited, since it may not invest more than 25% of its
net asset value in such securities and since it may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist. The same risks apply to the Millennium Portfolio's
investments in foreign securities.
PORTFOLIO TURNOVER
While the future annual rate of portfolio turnover is unknown, Navellier
Management, Inc. estimates but cannot guarantee that the annual portfolio
turnover rate will not exceed 200%. Navellier Management, Inc., which is also
the investment advisor to the Millennium Portfolio, will employ the same
investment style for the Acquiring Fund as it employed in managing the
Millennium Portfolio, which had an annual portfolio turnover rate in 2002 of
116%. However, these are NOT restrictions on Navellier Management, Inc. and if,
in Navellier Management Inc.'s judgment, a higher annual portfolio turnover rate
is required in order to attempt to achieve a higher overall performance, then
Navellier Management, Inc. is permitted to do so. However, high portfolio
turnover (100% or more) will result in increased brokerage commissions, dealer
mark-ups, and other transaction costs on the sale of securities and on
reinvestment in other securities and could therefore adversely affect
performance.
The risks associated with portfolio turnover for Acquiring Fund are
essentially the same for the Millennium Portfolio.
NON-DIVERSIFICATION RISK
Both the Millennium Portfolio and the Acquiring Fund are non-diversified
investment companies (assuming the approval of the shareholders of Touchstone
Large Cap Growth to change the Fund to a non-diversified fund upon completion of
the Reorganization) and as such, may invest up to 25% of its assets in a single
issuer and up to 50% of its assets may consist of securities of only two
issuers. A higher percentage of investments among fewer issuers may result in
greater fluctuation in the total market value of the Portfolio's investments
than in the investments of a Portfolio which invests in numerous issuers.
THE PROPOSED TRANSACTIONS
PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions of the proposed merger, as contemplated by the
Reorganization, are set forth in the Plan. Significant provisions of the Plan,
with respect to the proposed Reorganization of the Millennium Portfolio into the
Acquiring Fund, are summarized immediately below. This summary, however, is
qualified in its entirety by reference to the Plan, a form of which is attached
to this combined prospectus/ proxy statement as Appendix A.
24
With respect to the proposed Reorganization, the Plan contemplates (i) the
Acquiring Fund, on the closing date of the Reorganization, acquiring all of the
assets of the Portfolio and all the assets of the Millennium Portfolio in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
all valid liabilities of the Portfolio and of the Millennium Portfolio and (ii)
the constructive distribution of Acquiring Fund Shares to the Shareholders of
the Portfolio and to the shareholders of the Millennium Portfolio in exchange
for the corresponding class of shares of Portfolio Shares and the Millennium
Portfolio Shares, all as provided for by the Plan.
The assets of the Portfolio and the assets of the Millennium Portfolio to be
acquired by the Acquiring Fund include all property, including without
limitation, all cash, securities, commodities and futures interests and
dividends or interest receivables which are owned by the Portfolio and those
owned by the Millennium Portfolio and any deferred or prepaid expenses shown as
an asset on the books of the Portfolio and on the books of the Millennium
Portfolio on the closing date of the Reorganization. The Acquiring Fund will
assume from the Portfolio and from the Millennium Portfolio all valid
liabilities, expenses, costs, charges and reserves reflected on unaudited
statements of assets and liabilities of the Portfolio and of the Millennium
Portfolio.
The Acquiring Fund also will deliver Acquiring Fund Shares to the Portfolio
and to the Millennium Portfolio, which Acquiring Fund Shares the Portfolio and
the Millennium Portfolio shall then distribute to their respective Shareholders
in exchange for such Shareholders' Portfolio Shares or Millennium Portfolio
Shares. The number of full and fractional shares of each class of the Acquiring
Fund to be received by the shareholders of the Millennium Portfolio will be
determined by multiplying the number of full and fractional shares of the
corresponding class of the Millennium Portfolio by a factor which shall be
computed by dividing the net asset value per share of the respective class of
shares of the Millennium Portfolio by the net asset value per share of the Class
A shares of Navellier Performance Large Cap Growth Portfolio. Such computations
will take place as of the Valuation Time. The net asset value per share of each
class will be determined by dividing assets, less liabilities, in each case
attributable to the respective class, by the total number of outstanding shares.
The exchange of the Portfolio's assets and the Millennium Portfolio's assets for
the Acquiring Fund Shares is anticipated to occur on August 22, 2003, or such
later date as the parties may agree upon (the "Closing Date").
The value of the Portfolio's assets and the Millennium Portfolio's assets to
be acquired by the Acquiring Fund and the value of the Portfolio's valid
liabilities and the Millennium Portfolio's valid liabilities to be assumed by
the Acquiring Fund and the net asset value of a share of the Acquiring Fund will
be determined as of immediately after the close of regular trading on the NYSE
on the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's then-current Prospectus and Statement of Additional Information.
Upon the Closing Date, the Portfolio and the Millennium Portfolio will
liquidate and distribute pro rata to their Shareholders of record (as evidenced
by such Shareholders' Portfolio and Millennium Portfolio Shares) the Acquiring
Fund Shares received by the Portfolio and the Millennium Portfolio in exchange
for such Shareholders' interests in the Portfolio and the Millennium Portfolio.
These liquidations and distributions will be accomplished by opening accounts on
the books of the Acquiring Fund in the name of each shareholder of record in the
Portfolio and in the Millennium Portfolio and by crediting thereon the shares
previously credited to the Portfolio and to the Millennium Portfolio account of
the shareholder on those books, as described above (see "Synopsis--Continuation
of Shareholder Accounts; Share Certificates"). Each such Acquiring Fund
shareholder account shall represent the respective pro-rata number of the
Acquiring Fund Shares due to such Shareholder.
Accordingly, every Shareholder will own Acquiring Fund Shares immediately
after the Reorganization, the total value of which Acquiring Fund Shares will be
equal to the total value of his or her Portfolio Shares or Millennium Portfolio
Shares immediately prior to the Reorganization. Moreover, because the Acquiring
Fund Shares will be issued at net
25
asset value in exchange for the net assets transferred from the Portfolio or
from the Millennium Portfolio, the total net asset value of the Acquiring Fund
Shares received by Portfolio Shareholders or Millennium Portfolio Shareholders
after the transfer of assets will be equal to the net asset value of the
Portfolio Shares or Millennium Portfolio Shares at the Closing Date. Thus, the
Reorganization will not result in a dilution in value of any Shareholder
account.
The consummation of the proposed transaction contemplated by the
Reorganization is subject to a number of conditions set forth in the Plan, some
of which conditions may be waived by the Touchstone Strategic Trust Board or by
the Millennium Funds Board, or by an authorized officer of the Touchstone
Strategic Trust or The Navellier Millennium Funds, as appropriate. Among the
significant conditions (which may not be waived) for the Reorganization are: (i)
the receipt by the Portfolio and by the Millennium Portfolio and by the
Acquiring Fund of an opinion of counsel as to certain Federal income tax aspects
of the Reorganization (see "The Proposed Transactions--Federal Income Tax
Consequences") (which opinion of counsel has already been received); (ii) the
approval of the Plan by the affirmative vote of the holders of at least 67% of
the Portfolio shares and of the Millennium Portfolio Shares present in person or
by proxy entitled to vote at the Portfolio shareholders' meeting and at the
Millennium Portfolio Shareholder's meeting if a quorum is present or a majority
of the Portfolio's and of the Millennium Portfolio's outstanding voting shares,
whichever percentage is less and (iii) approval of the Plan by the Portfolio's
Board of Trustees and by the Millennium Portfolio's Board of Trustees (which
approvals have also already been obtained). The Plan may be terminated and the
Reorganization abandoned at any time, before or after approval by the
Shareholders, prior to the applicable Closing Date or by mutual consent of the
Portfolio or the Millennium Portfolio and the Acquiring Fund. In addition, the
Plan may be amended in any mutually-agreeable manner, except that no amendment
may be made to the Plan subsequent to the Meeting that would be materially
detrimental to the Shareholders.
The Investment Sub-Advisor to the Acquiring Fund (Navellier Management,
Inc.) contemplates that the Portfolio's and the Millennium Portfolio's assets at
the date of the transactions of the Reorganization will be invested in a manner
consistent with the investment objectives and policies of both the Portfolio and
the Millennium Portfolio and the Acquiring Fund.
REASONS FOR THE PROPOSED TRANSACTIONS
As described below in greater detail, the Portfolio's Trustees and the
Millennium Portfolio's Trustees believe the Reorganization would benefit
Shareholders of the Portfolio and of the Millennium Portfolio by substantially
reducing existing operating costs and expenses of the Portfolio and of the
Millennium Portfolio by an estimated $50,000 per year or more thereby promoting
more efficient operations. It is estimated that a proposed merger of the
Portfolio and of the Millennium Portfolio into the Acquiring Fund would
substantially reduce the annual operating expenses of the Portfolio and of the
Millennium Portfolio by reducing the Portfolio's and the Millennium Portfolio's
annual Independent Trustee's fees, expenses, independent counsel's fees and; by
reducing liability insurance, costs of printing separate prospectuses, annual
and semi-annual shareholder reports, quarterly reports and mailings for the
Portfolio and for the Millennium Portfolio; by reducing the management fee
charged by the Investment Advisor; and that a proposed merger would generally
increase the efficiency of operations and would not result in any change in the
way the assets were managed, since the Investment Sub-Advisor, Navellier
Management, Inc., would remain the same and would operate pursuant to the same
investment objectives and restrictions. For these reasons, the Trustees believe
that the Reorganization of the Portfolio and of the Millennium Portfolio into
the Acquiring Fund is in the best interests of the Shareholders of the Portfolio
and of the Millennium Portfolio and that the interests of the Shareholders of
the Portfolio and of the Millennium Portfolio would not be diluted by the
Reorganization.
The Portfolio Trustees and the Millennium Portfolio Trustees recommend that
the Shareholders of the Portfolio and of the Millennium Portfolio vote FOR
Proposal 1 (the Reorganization) based on a number of factors, first and foremost
of which is that the
26
Reorganization should result in substantial savings. The Portfolio Trustees and
the Millennium Portfolio Trustees also believe that the Reorganization, if
effected, would enable the resulting larger fund complex, with its larger asset
base, to achieve enhanced distribution capability. It is also believed that the
anticipated reduction in costs should increase the performance of the Portfolio
and of the Millennium Portfolio.
It is estimated that the proposed merger should permit the reduction or
elimination of certain costs and expenses presently incurred for services that
are separately performed for the Portfolio, the Millennium Portfolio and the
Acquiring Fund. For example, the projected Independent Trustees fees and
expenses expected to be paid to the Independent Trustees of the Portfolio and of
the Millennium Portfolio would be reduced, as would the liability insurance and
the attorney's fees and costs of outside counsel for the Independent Trustees.
These costs should be eliminated or greatly reduced. Printing and mailing costs
should be reduced as a result of a single prospectus, annual report, and
semi-annual report. As a general rule, economies can be expected to be realized
primarily with respect to fixed expenses, such as costs of printing and fees for
professional services. Expenses that are based on the value of assets or the
number of shareholder accounts, such as custody and transfer agent fees,
however, would be largely unaffected by the Reorganization. Achievement of these
goals, of course, cannot be assured.
The Portfolio Trustees and the Millennium Portfolio Trustees recommend the
proposed Reorganization, and the transactions contemplated thereby, to the
Shareholders for the reasons set forth above as well as on a number of other
factors, including the following:
1. the terms and conditions of the Reorganization and the fact that the
Reorganization would not result in dilution of Shareholder interests;
2. the fact that the investment objectives, policies, Navellier investment
style and restrictions of the Portfolio, the Millennium Portfolio and the
Acquiring Fund would remain essentially the same;
3. similar service features available to shareholders in the Portfolio, the
Millennium Portfolio and the Acquiring Fund;
4. the anticipated benefits to the Shareholders of the Portfolio and of the
Millennium Portfolio by being part of the Touchstone Investments;
5. the tax-free nature and consequences of the Reorganization;
6. the expense ratios, fees, and expenses of Touchstone Large Cap Growth
including the fact that the investment advisory fee rate paid by Touchstone
Large Cap Growth is lower than that paid by Millennium Portfolio;
7. the fact that the Manager has contractually agreed to limit the total annual
operating of the Acquiring Fund for at least two years and that such
expenses for Class A shareholders would be lower than the current operating
expenses for the Millennium Portfolio Class A shareholders, and that the
Manager has contractually agreed to limit the total annual operating of the
Class B and C shares of the Acquiring Fund for at least two years such that
expenses for Class B and C shareholders would be the same as the current
operating expenses of the Millennium Portfolio Class B and C shares;
8. the fact that Navellier Management, Inc. and Touchstone Advisors, Inc. will
bear the expenses incurred by the Millennium Portfolio and the Acquiring
Fund in connection with the Reorganization;
The Trustees of the Trust have also approved the Plan on behalf of Touchstone
Large Cap Growth.
27
DESCRIPTION OF SECURITIES TO BE ISSUED
GENERAL. The Acquiring Fund Shares to be issued pursuant to the proposed
Reorganization represent shares of beneficial interest in the Large Cap Growth
Fund of the Touchstone Strategic Trust, which is a diversified, open-end
management investment company. Touchstone Strategic Trust is an unincorporated
voluntary association organized under the laws of the State of Massachusetts as
a business trust, pursuant to Touchstone Strategic Trust's Declaration of Trust,
dated November 18, 1982 (the "Declaration of Trust"). The Declaration of Trust
authorizes Touchstone Strategic Trust to issue an unlimited number of shares of
beneficial interest in one or more series. Currently, Touchstone Strategic Trust
has authorized seven series: the International Equity Fund, the Emerging Growth
Fund, the Growth Opportunities Fund, the Large Cap Growth Fund, the Enhanced 30
Fund, the Value Plus Fund and the Small Cap Growth Fund. Other series in the
Touchstone Strategic Trust, however, may be added in the future. Each Acquiring
Fund Share represents an equal proportionate interest with each other Acquiring
Fund Share and each such Acquiring Fund Share is entitled to equal voting,
dividend, liquidation and redemption rights. Acquiring Fund Shares entitle their
holders to one vote per full share held and to fractional votes for fractional
shares held. The Acquiring Fund Shares do not have cumulative voting rights,
preemptive rights or subscription rights and are fully paid, nonassessable,
redeemable and freely transferable.
Currently, each shareholder of the Acquiring Fund is permitted to inspect
the records, accounts and books of the Touchstone Strategic Trust for any
legitimate business purpose.
MEETINGS. As a Massachusetts business trust, Touchstone Strategic Trust is
not required to hold an annual shareholders' meeting if the 1940 Act does not
require such a meeting. The Declaration of Trust provides that a special meeting
of Touchstone Strategic Trust shareholders of any series of Touchstone Strategic
Trust may be called by the Trustees of Touchstone Strategic Trust and shall be
called by the Trustees upon the written request of shareholders owning at least
10% of the outstanding shares of a series of the Touchstone Strategic Trust
entitled to vote. Touchstone Strategic Trust will hold special shareholder
meetings as required or deemed desirable by the Board for such purposes as
electing Trustees, changing fundamental policies or approving an investment
advisory or shareholder services agreement. Any Director may be removed from
office with or without cause at any time either by written instrument, signed by
at least two-thirds (2/3) of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become effective, or by a vote
of Touchstone Strategic Trust shareholders owning at least two-thirds (2/3) of
the outstanding shares of a series of the Touchstone Strategic Trust. If
requested by shareholders of at least 10% of the outstanding shares of a series
of the Touchstone Strategic Trust, Touchstone Strategic Trust will call a
shareholder meeting for the purpose of voting upon the question of the removal
of a Director and will assist in communications with other Touchstone Strategic
Trust shareholders as required by Section 16(c) of the 1940 Act.
SHAREHOLDER LIABILITY. Beneficial owners of a Massachusetts business trust,
such as Touchstone Strategic Trust,may under some circumstances be liable for
obligations of the Fund. Touchstone Strategic Trust's governing instrument, the
Trust Declaration, however, specifically disclaims shareholder liability for
acts or obligations of Touchstone Strategic Trust and provides that Touchstone
Strategic Trust's shareholders shall not be subject to any personal liability
for the acts or obligations of Touchstone Strategic Trust. The Trust Declaration
further provides for indemnification, out of the property of the series of
Touchstone Strategic Trust with respect to which such shareholder's shares are
issued, for all losses and expenses of any shareholder held personally liable
solely by reason of his or her being or having been a shareholder of such series
and not because of his or her acts or omissions or for some other reason. Thus,
the risk of a shareholder of Touchstone Strategic Trust incurring financial loss
on account of shareholder liability is considered remote since such liability is
limited to circumstances in which a disclaimer is inoperative and Touchstone
Strategic Trust would be unable to meet its obligations.
28
LIABILITY OF TRUSTEES. Under the Declaration of Trust, a Trustee will be
held personally liable only for the Trustee's own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of a Trustee. Under said Declaration of Trust and separate
indemnity agreements, Trustees and officers of Touchstone Strategic Trust
("Trust Officers") will be indemnified for the expenses of litigation against
them unless it is determined that the person did not act in good faith in the
reasonable belief that the person's action was in or not opposed to the best
interest of Touchstone Strategic Trust or if the person's conduct is determined
to constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of that person's duties. Touchstone Strategic Trust also may advance
money for these expenses provided that the Trustee or the Trust Officer
undertakes to repay Touchstone Strategic Trust if that person's conduct later is
determined to preclude indemnification. The Navellier Performance Funds'
Declaration of Trust and separate indemnity agreements currently set forth
comparable provisions.
The foregoing is only a summary of certain characteristics of (i) the shares
of beneficial interest of Touchstone Strategic Trust to be issued pursuant to
the proposed Reorganization, (ii) the operations of Touchstone Strategic Trust's
Declaration of Trust and By-Laws, and (iii) Massachusetts law. The foregoing is
not a complete description of the shares of beneficial interest of Touchstone
Strategic Trust nor of the documents or laws cited. Shareholders should refer to
the provisions of Massachusetts's law directly for a more thorough description.
FEDERAL INCOME TAX CONSEQUENCES
Touchstone Strategic Trust and The Navellier Millennium Funds have received,
as a condition to the Reorganization, an opinion from counsel to the effect, for
Federal income tax purposes and with respect to the Reorganization, that:
1. the proposed Reorganization and the transactions contemplated thereby, as
described herein, will constitute a tax-free "reorganization" within the
meaning of Section 368(a)(1)(C) of the Internal Revenue Code (the "Code");
2. no gain or loss generally will be recognized to the Portfolio or to the
Millennium Portfolio upon the transfer of all of the Portfolio's and all of
the Millennium Portfolio's assets to the Acquiring Fund in exchange solely
for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
valid liabilities of the Portfolio and of the Millennium Portfolio and the
subsequent distribution of those Acquiring Fund Shares to the Portfolio's
Shareholders and to the Millennium Portfolio's Shareholders of record in
liquidation thereof;
3. no gain or loss will be recognized to the Acquiring Fund upon the receipt of
those Portfolio and Millennium Portfolio assets in exchange solely for
Acquiring Fund Shares and the assumption by the Acquiring Fund of those
valid Portfolio and Millennium Portfolio liabilities;
4. the Acquiring Fund's basis for those Portfolio assets and Millennium
Portfolio assets transferred by the Portfolio and by the Millennium
Portfolio to the Acquiring Fund will be the same as the basis thereof in the
Portfolio's and Millennium Portfolio's hands immediately before the
Reorganization and the Acquiring Fund's holding period for those assets will
include the Portfolio's and Millennium Portfolio's holding periods
therefore;
5. each Shareholder of record will recognize no gain or loss upon the
constructive exchange of all of his or her Portfolio and Millennium
Portfolio Shares solely for Acquiring Fund Shares pursuant to the
Reorganization;
6. each Shareholder's basis for the Acquiring Fund Shares to be received by the
Shareholder pursuant to the Reorganization will be the same as the
Shareholder's basis in the Portfolio Shares or Millennium Portfolio Shares
to be constructively surrendered in exchange therefore; and
29
7. each such Shareholder's holding period for those Acquiring Fund Shares will
include the period during which the Portfolio Shares or Millennium Portfolio
Shares to be constructively surrendered in exchange for Acquiring Fund
Shares were held, provided the Portfolio Shares or Millennium Portfolio
Shares were held as capital assets by that Shareholder on the date of the
Reorganization.
A revenue ruling of the Internal Revenue Service as to the Reorganization is
not expected to be obtained.
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF THE PRINCIPAL FEDERAL
INCOME TAX CONSEQUENCES OF THE REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE
TAX ADVICE. THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE WILL
CONCUR ON ALL OR ANY OF THE ISSUES DISCUSSED ABOVE. SHAREHOLDERS OF THE
PORTFOLIO AND OF THE MILLENNIUM PORTFOLIO ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES WITH RESPECT TO
THE FOREGOING MATTERS AND ANY OTHER CONSIDERATIONS WHICH MAY BE APPLICABLE TO
THE SHAREHOLDERS.
PRO FORMA CAPITALIZATION AND RATIOS
The following table shows the capitalization of the Portfolio, the
Millennium Portfolio, and the Acquiring Fund shares as of December 31, 2002, and
combined in the aggregate on a pro forma basis, as of December 31, 2002 giving
effect to the Reorganization:
Touchstone Large Cap Navellier Millennium Navellier Performance Touchstone Large Cap
Class A Information Growth Large Cap Growth Large Cap Growth Growth Combined Pro Forma
- ------------------------- -------------------------- -------------------------- -------------------------- -------------------------
Net Assets
Class A $33,843,198 $355,316 $13,831,464 48,029,978
Class B 54,017 423,950 477,967
Class C 1,092,490 215,949 1,308,439
Total Net Assets 34,989,705 995,215 13,831,464 49,816,384
Net Asset Value Per Share
Class A
Class B $8.05 $4.63 $12.19 $12.19
Class C 7.62 4.56 12.19
7.59 4.55 12.19
Shares Outstanding
Class A
Class B 4,202,127 76,781 1,134,468 3,939,924
Class C 7,090 92,912 39,210
Total Shares Outstanding 143,907 47,449 107,337
4,353,124 217,142 1,134,468 4,086,471
DISSOLUTION OF THE PORTFOLIOS
If the Plan is approved by the Shareholders of the Portfolio and of the
Millennium Portfolio and the Reorganization is completed, the Portfolio and the
Millennium Portfolio will be dissolved as soon as practicable in accordance with
the provisions of Delaware law and the Plan. See "The Proposed
Transactions--Agreement and Proposed Plan of Reorganization".
NAVELLIER GROUP RECOMMENDATION
The Portfolio Trustees and Millennium Portfolio Trustees have solicited this
shareholder vote to approve the Reorganization and recommend that the Portfolio
Shareholders and Millennium Portfolio Shareholders vote FOR the Reorganization
on the
30
enclosed GOLD proxy card. The Portfolio Trustees and Millennium Portfolio
Trustees, for the reasons mentioned herein (See "Reasons For Proposed
Transactions"), believe the Reorganization of the Portfolio and Millennium
Portfolio into the Acquiring Fund would result in cost savings, would be in the
best interests of the Portfolio Shareholders and Millennium Portfolio
Shareholders and that their interests would not be diluted.
The Portfolio Trustees and Millennium Portfolio Trustees therefore recommend
that the Shareholders of the Millennium Portfolio vote FOR Proposal No. 1 (the
proposal to merge the Portfolio and Millennium Portfolio into the Acquiring Fund
and the transactions contemplated thereby).
ADDITIONAL INFORMATION ABOUT
THE ACQUIRING FUND AND THE ACQUIRING FUND SHARES
Additional information about the Acquiring Fund is included in the current
Prospectus of the Touchstone Strategic Trust, dated August 1, 2002. A copy of
that prospectus has been filed with the Commission and is incorporated by
reference herein. A Shareholder of the Portfolio or the Millennium Portfolio
will receive with this combined prospectus/proxy statement, a copy of the
prospectus for Touchstone Strategic Trust. Further information about the
Acquiring Fund is included in the Statement of Additional Information for
Touchstone Strategic Trust, dated August 1, 2002. The Statement of Additional
Information has been filed with the Commission and is incorporated by reference
herein. Copies of that Statement of Additional Information for Touchstone
Strategic Trust may be obtained without charge by contacting Touchstone
Investments toll-free at 1-800-543-0407.
ADDITIONAL INFORMATION ABOUT
THE PORTFOLIO AND THE PORTFOLIO SHARES
Additional information about the Portfolio is included in the current
Prospectus of the Navellier Performance Funds, dated May 1, 2003. A copy of that
prospectus has been filed with the Commission and is incorporated by reference
herein. A Shareholder will receive with this combined prospectus/proxy statement
a copy of the prospectus for The Navellier Performance Funds. Further
information about the Portfolio is included in the Statement of Additional
Information for The Navellier Performance Funds, dated May 1, 2003, which also
has been filed with the Commission and is incorporated by reference herein. A
copy of the Statement of Additional Information for The Navellier Performance
Funds may be obtained without charge by contacting Navellier Management, Inc. at
One East Liberty Street, Third Floor, Reno, Nevada 89501, or by telephoning
Navellier Management, Inc. toll-free at 1-800-887-8671.
ADDITIONAL INFORMATION ABOUT THE MILLENNIUM PORTFOLIO AND THE
MILLENNIUM PORTFOLIO SHARES
Additional information about the Millennium Portfolio is included in the
current Prospectus of the Navellier Millennium Funds, dated May 1, 2003. A copy
of that prospectus has been filed with the Commission and is incorporated by
reference herein. A Shareholder will receive with this combined prospectus/proxy
statement a copy of the prospectus for The Navellier Millennium Funds. Further
information about the Millennium Portfolio is included in the Statement of
Additional Information for The Navellier Millennium Funds, dated May 1, 2003,
which also has been filed with the Commission and is incorporated by reference
herein. A copy of the Statement of Additional Information for The Navellier
Millennium Funds may be obtained without charge by contacting Navellier
Management, Inc. at One East Liberty Street, Third Floor, Reno, Nevada 89501, or
by telephoning Navellier Management, Inc. toll-free at 1-800-887-8671.
31
MISCELLANEOUS
AVAILABLE INFORMATION
Touchstone Strategic Trust is registered under the 1940 Act and is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended, and the 1940 Act and, in accordance therewith, files reports, proxy
materials and other information with the Commission. The Navellier Performance
Funds and the Navellier Millennium Funds are registered under the 1940 Act and
are required to file reports under the 1940 Act. Such reports, proxy materials
and other information can be inspected at the Securities and Exchange Commission
at 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, DC 20539, at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Acquiring Fund
Shares will be passed upon by Samuel Kornhauser, 155 Jackson Street, Suite 1807,
San Francisco, California 94111 ("Counsel"). Counsel has rendered an opinion as
to certain Federal income tax consequences of the Reorganization.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of the Touchstone Large Cap Growth Fund at March 31,
2003, and for the periods indicated therein, included in the Company's Annual
Report and incorporated by reference herein and in the Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report appearing therein, and are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing. The financial statements of Navellier Large Cap
Portfolio, a series of Navellier Performance Funds, Navellier Large Cap
Portfolio, a series of Navellier Millennium Funds, and Touchstone Large Cap
Growth Fund at December 31, 2002, and for the periods indicated therein,
included in the (Trusts') Annual Report and incorporated by reference herein and
in the Registration Statement, have been audited by Tait, Weller & Baker,
independent auditors, as set forth in their report appearing therein, and are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing. Copies of these
financial statements, as included in the SAI, may be obtained without charge by
contacting Touchstone Securities, Inc. at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202, or by telephoning toll-free at 1-800-543-0407, for the
Touchstone audited financial statements and by contacting Navellier Management,
Inc., at One East Liberty Street, Third Floor, Reno, Nevada 89501, or by
telephoning Navellier Management, Inc. toll-free at 1-800-887-8671, for the
Portfolio and or Millennium Portfolio financial statements.
32
OTHER BUSINESS
The Millennium Portfolio Trustees know of no business to be brought before
the Meeting other than the matters set forth in this combined prospectus/proxy
statement. Should any other matter requiring a vote of Shareholders arise,
however, the Proxies will vote thereon according to their best judgment in the
interests of the Millennium Portfolio and of the Shareholders.
By Louis G. Navellier
----------------------------------
Trustee, The Navellier
Millennium Funds
One East Liberty Street, Third Floor
Reno, Nevada 89501
July 18, 2003
33
APPENDIX A:
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of June, 2003, by and between THE NAVELLIER MILLENNIUM FUNDS (the
"Millennium Fund"), a Delaware business trust with its principal place of
business at One East Liberty Street, Third Floor, Reno, Nevada 89501, THE
NAVELLIER PERFORMANCE FUNDS (the "Performance Funds"), a Delaware business trust
with its principal place of business at One East Liberty Street, Third Floor,
Reno, Nevada 89501 and TOUCHSTONE STRATEGIC TRUST, a Massachusetts business
trust with its principal place of business at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), with respect to the
proposed reorganizations of the NAVELLIER LARGE CAP GROWTH PORTFOLIO (the
"Portfolio"), which portfolio is a series of the Navellier Performance Funds and
the NAVELLIER LARGE CAP GROWTH PORTFOLIO (the "Millennium Portfolio") which
portfolio is a series of the Navellier Millennium Funds), pursuant to which the
Portfolio and the Millennium Portfolio will be merged into and become part of
the Large Cap Growth Fund (the "Acquiring Fund") of the Touchstone Strategic
Trust (the "Reorganization"). Specifically, this Agreement is intended to be and
is adopted for the purpose of providing for the Reorganization of the Portfolio
and the Millennium Portfolio into the Acquiring Fund. The Reorganization will
consist of the transfer of all of the assets of the Portfolio and the Millennium
Portfolio to the Acquiring Fund in exchange solely for (i) shares of beneficial
interest in the Acquiring Fund (the "Acquiring Fund Shares") and (ii) the
assumption by the Acquiring Fund of all valid liabilities of the Portfolio and
of the Millennium Portfolio and the distribution of the Acquiring Fund Shares to
the Shareholders of the Portfolio and the of Millennium Portfolio in complete
liquidation of the Portfolio and the Millennium Portfolio, as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Performance Funds and the Millennium Funds and the Touchstone
Strategic Trust are each open-end, registered investment companies of the
management type and the Portfolio and the Millennium Portfolio own securities
which are assets of the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Trustees of the Portfolio and the Trustees of the Millennium
Portfolio have each determined, with respect to such Reorganization, that the
exchange of all of the assets of the Portfolio and all the assets of the
Millennium Portfolio for Acquiring Fund shares and the assumption of all valid
liabilities of the Portfolio and of the Millennium Portfolio by the Acquiring
Fund is in the best interests of the Portfolio and the Millennium Portfolio and
their Shareholders and that the interests of the existing Shareholders of the
Portfolio and the Millennium Portfolio would not be diluted as a result of this
transaction; and
WHEREAS, the purpose of the Reorganization is to combine the assets of the
Acquiring Fund with those of the Portfolio and the Millennium Portfolio in an
attempt to achieve greater operating economies and to retain Navellier
Management, Inc. as the investment sub-advisor to manage the assets of the
Acquiring Fund after the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree, with
respect to the Reorganization, as follows:
34
1. THE TRANSFER OF THE ASSETS OF THE PORTFOLIO AND THE ASSETS OF THE
MILLENNIUM PORTFOLIO TO THE ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES, THE ASSUMPTION OF ALL VALID LIABILITIES OF THE PORTFOLIO AND OF THE
MILLENNIUM PORTFOLIO BY THE ACQUIRING FUND AND THE LIQUIDATION OF THE
PORTFOLIO AND THE MILLENNIUM PORTFOLIO
1.1 For the Reorganization, the closing shall take place as
provided for in paragraph 3.1 ("Closing") and the provisions of
paragraphs 1 through 8 of this Agreement shall apply. At the Closing,
the Portfolio and the Millennium Portfolio agree to transfer all of
their assets, as set forth in paragraph 1.2, to the Acquiring Fund,
and the Acquiring Fund agrees in exchange therefore: (1) to deliver to
the Portfolio and to the Millennium Portfolio the number of Acquiring
Fund Shares, including fractional Acquiring Fund Shares, determined by
dividing the value of each Class of share of the Millennium
Portfolio's net assets and each Class of corresponding share of the
Acquiring Fund's net assets as of the time set forth in paragraph 2.1
by the net asset value of one Performance Large Cap Growth Portfolio
share computed in the manner and as of the time and date set forth in
paragraph 2.2; and (ii) to assume all valid liabilities of the
Portfolio and of the Millennium Portfolio, as set forth in paragraph
1.3.
1.2 The assets of the Portfolio and the assets of the Millennium
Portfolio to be acquired by the Acquiring Fund shall consist of all
property, including, without limitation, all cash, securities,
interests, and dividends or interest receivable which are owned by the
Portfolio and owned by the Millennium Portfolio and any deferred or
prepaid expenses shown as assets on the books of the Portfolio or on
the books of the Millennium Portfolio on the closing date provided in
paragraph 3.1 (the "Closing Date").
1.3 The Portfolio and the Millennium Portfolio will each
endeavor to discharge all of their known valid liabilities and
obligations prior to the Closing Date. The Acquiring Fund shall assume
all valid liabilities, expenses, costs, charges and reserves reflected
on unaudited statements of assets and liabilities of the Portfolio and
of the Millennium Portfolio prepared by the administrators of the
Acquiring Fund and the Portfolio and the Millennium Portfolio, as of
the Valuation Date (as defined in paragraph 2.1), in accordance with
generally accepted accounting principles consistently applied from the
prior audited period.
1.4 Immediately after the transfer of assets provided for in
paragraph 1.1, the Portfolio and the Millennium Portfolio will each
distribute pro rata to their Shareholders of record, determined as of
immediately after the close of business on the Closing Date (the
"Portfolio Shareholders") and (the "Millennium Shareholders"), the
Acquiring Fund Shares received by the Portfolio and by the Millennium
Portfolio pursuant to paragraph 1.1 and will each completely
liquidate. Such distributions and liquidations will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account
of the Portfolio and to the account of the Millennium Portfolio on the
books of the Acquiring Fund to the share records of the Acquiring Fund
in the names of the Portfolio Shareholders and in the names of the
Millennium Portfolio Shareholders and representing the respective pro
rata number of the Acquiring Fund Shares due such Shareholders. All
issued and outstanding shares of the Portfolio and of the Millennium
Portfolio will simultaneously be canceled on the books of the
Portfolio and of the Millennium Portfolio. The Acquiring Fund shall
not issue certificates representing the Acquiring Fund Shares in
connection with such exchange. Ownership of Acquiring Fund Shares will
be shown on the books of the Acquiring Fund's transfer agent.
2. VALUATION
2.1 The value of the Portfolio's assets and the value of the
Millennium Portfolio's assets to be acquired by the Acquiring Fund
hereunder shall be the net asset value of such assets computed as of
immediately after the close of business of the New York Stock Exchange
on the Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures for
35
computing net asset value set forth in the Portfolio's and in the
Millennium Portfolio's then-current prospectus or statement of
additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the
net asset value per share computed as of immediately after the close
of business of the New York Stock Exchange on the Valuation Date,
using the valuation procedures for computing net asset value set forth
in the Touchstone Strategic Trust's then-current prospectus or
statement of additional information.
2.3 The number of full and fractional shares of each class of
the Acquiring Fund to be received by the shareholders of the
Millennium Portfolio will be determined by multiplying the number of
full and fractional shares of the corresponding class of the
Millennium Portfolio by a factor which shall be computed by dividing
the net asset value per share of the respective class of shares of the
Millennium Portfolio by the net asset value per share of the Class A
shares of Navellier Performance Large Cap Growth Portfolio. Such
computations will take place as of the Valuation Time. The net asset
value per share of each class will be determined by dividing assets,
less liabilities, in each case attributable to the respective class,
by the total number of outstanding shares. The number of the Acquiring
Fund Shares to be issued (including fractional shares, if any) in
exchange for the Portfolio's assets and the Millennium Portfolio's
assets shall be determined using the same valuation procedures
referred to in paragraph 2.1 by the net asset value of Performance
Large Cap Growth determined in accordance with paragraph 2.2.
2.4 All computations of value for the Acquiring Fund shall be
made by Integrated Fund Services, Inc.; all computations of value for
the Portfolio and for the Millennium Portfolio shall be made by FBR
National Bank & Trust.
3. CLOSING AND CLOSING DATE
3.1 The Closing for the Reorganization shall be August 22, 2003
or such other date as the parties may agree to in writing. All acts
taking place at the Closing shall be deemed to take place
simultaneously as of immediately after the close of business on the
Closing Date unless otherwise agreed to by the parties. The close of
business on the Closing Date shall be as of 4:00 p.m., New York Time.
The Closing shall be held at the offices of the Acquiring Fund, 221
East Fourth Street, Suite 300, Cincinnati, Ohio 45202, or at such
other time and/or place as the parties may agree.
3.2 FBR National Bank & Trust, Bethesda, Maryland, as custodian
for the Portfolio and for the Millennium Portfolio (the "Custodian"),
shall deliver at the Closing a certificate of an authorized officer
stating that each of: (i) the Portfolio's and the Millennium
Portfolio's portfolio securities, cash, and any other assets shall
have been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date; and (ii) all necessary
taxes, including all applicable Federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery of the Portfolio's
and the Millennium Portfolio's portfolio securities.
3.3 FBR National Bank & Trust, (the "Transfer Agent"), on behalf
of the Portfolio and on behalf of the Millennium Portfolio, shall
deliver at the Closing a certificate of an authorized officer stating
that their records contain the names and addresses of the Portfolio
Shareholders and of the Millennium Portfolio Shareholders and the
number and percentage ownership of outstanding shares owned by each
such shareholder immediately prior to the Closing. The Acquiring Fund
by an authorized officer of Integrated Fund Services, Inc. shall issue
and deliver a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of the Portfolio and to
the Secretary of the Millennium Portfolio or provide evidence
satisfactory to the Portfolio and to the Millennium
36
Portfolio that such Acquiring Fund Shares have been credited to the
Portfolio's account and to the Millennium Portfolio's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver
to the other such bills of sales, checks, assignments, share
certificates, if any, receipts or other documents as such other party
or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Performance Funds, on its own and on behalf of the
Portfolio, and the Millennium Funds on its own and on behalf of the
Millennium Portfolio each represents and warrants to the Touchstone
Strategic Trust and the Acquiring Fund as follows:
(a) The Performance Funds and the Millennium Funds are each a
business trust duly organized, validly existing, and in good standing
under the laws of the State of Delaware;
(b) The Performance Funds and the Millennium Funds are each a
registered investment company classified as a management company of
the open-end type, and their registrations with the Securities and
Exchange Commission (the "Commission"), as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and
the registration of their shares, under the Securities Act of 1933, as
amended (the "1933 Act") are in full force and effect;
(c) Neither the Performance Funds nor the Portfolio nor the
Millennium Funds nor the Millennium Portfolio is in, and the
execution, delivery and performance of this Agreement will not result
in, a material violation of the Performance Funds' or the Millennium
Funds' Declarations of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Performance Funds or the Portfolio or the Millennium Funds or the
Millennium Portfolio is a party or by which any of them are bound;
(d) Neither the Performance Funds nor the Portfolio nor the
Millennium Funds nor the Millennium Portfolio has any material
contracts or other commitments (other than this Agreement) which will
be terminated with liability to them prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and accepted by
the Touchstone Strategic Trust or the Acquiring Fund, no material
litigation or administrative proceeding or investigation of or before
any court or governmental body is presently pending or to their
knowledge threatened against the Performance Funds or the Portfolio or
the Millennium Funds or the Millennium Portfolio or any of their
properties or assets which, if adversely determined, would materially
and adversely affect their financial condition or the conduct of their
business. Neither the Portfolio or the Millennium Portfolio knows of
any facts which might form the basis for the institution of such
proceedings and neither the Portfolio nor the Millennium Portfolio is
a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects the business or the ability of the Portfolio or the
Millennium Portfolio to consummate the transactions herein
contemplated;
(f) The Statement of Assets and Liabilities of the Portfolio
and the Statement of Assets and Liabilities of the Millennium
Portfolio each at December 31, 2002 have been audited by Tait, Weller
& Baker, independent accountants, and are in accordance with generally
accepted accounting principles consistently applied, and such
statements (copies of which have been furnished to the Acquiring Fund)
fairly reflect the financial conditions of the Portfolio and of the
Millennium Portfolio as of such date, and there are no contingent
liabilities of the Portfolio or of the Millennium Portfolio as of such
date not disclosed therein;
(g) Since December 31, 2002, there have not been any material
adverse changes in the Portfolio's or in the Millennium Portfolio's
financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Portfolio or by the Millennium Portfolio of
indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph
(g), a decline in net asset value per share of
37
the Portfolio or of the Millennium Portfolio, the discharge of
Portfolio or of the Millennium Portfolio liabilities, or the
redemption of Portfolio or Millennium Portfolio shares by Portfolio or
Millennium Portfolio Shareholders shall not constitute a material
adverse change;
(h) At the Closing Date, all material Federal and other tax
returns and reports of the Millennium Portfolio and the Portfolio
required by law to have been filed by such date or due after request
for extension, if any, shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or required to
be shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to the
best knowledge of the Millennium Portfolio and the Portfolio, no such
return is currently under audit and no assessment has been asserted
with respect to such returns;
(i) For each taxable year of its operation, the Portfolio and
the Millennium Portfolio has met the requirements of Subchapter M of
the Code for qualification as a regulated investment company and each
has elected to be treated as such;
(j) All issued and outstanding shares of the Portfolio and of
the Millennium Portfolio are, and at the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable by
the Portfolio and by the Millennium Portfolio. All of the issued and
outstanding shares of the Portfolio and of the Millennium Portfolio
will, at the time of Closing, be held by the persons and in the
amounts set forth in the records of the Transfer Agent, on behalf of
the Portfolio and on behalf of the Millennium Portfolio as provided in
paragraph 3.3. Neither the Portfolio nor the Millennium Portfolio have
outstanding any options, warrants or other rights to subscribe for or
to purchase any of their shares, nor is there outstanding any security
convertible into any of their shares;
(k) At the Closing Date, both the Portfolio and the Millennium
Portfolio will each have good and marketable title to their assets to
be transferred to the Acquiring Fund pursuant to paragraph 1.2 and
full right, power and authority to sell, assign, transfer and deliver
such assets hereunder and, upon delivery and payment for such assets,
the Acquiring Fund will acquire good and marketable title thereto,
subject to any restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Performance Funds' and the
Millennium Funds' Trustees and, subject to the approval of the
Portfolio's Shareholders and of the Millennium Portfolio's
Shareholders, this Agreement will constitute a valid and binding
obligation of the Performance Funds and of the Portfolio and of the
Millennium Funds and of the Millennium Portfolio, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Performance Funds
and the Portfolio and by the Millennium Funds and the Millennium
Portfolio for use in registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder
applicable thereto; and
(n) The proxy statements of the Performance Funds and of the
Millennium Funds (the "Proxy Statement") to be included in the
Registration Statement referred to in paragraph 5.6 (other than
information therein that relates to the Touchstone Strategic Trust and
the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially
misleading.
4.2 Touchstone Strategic Trust, on its own behalf and on behalf
of the Acquiring Fund, represents and warrants to the Performance
Funds and the Portfolio and to the Millennium Funds and the Millennium
Portfolio as follows:
(a) Touchstone Strategic Trust is a business trust duly
organized, validly existing and in good standing under the laws of the
State of Massachusetts;
38
(b) Touchstone Strategic Trust is a registered investment
company classified as a management company of the open-end type, and
its registration with the Commission, as an investment company under
the 1940 Act, and the registration of its shares, under the 1933 Act,
are in full force and effect;
(c) The current prospectus and statement of additional
information of Touchstone Strategic Trust conform in all material
respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and do
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets;
(e) Neither Touchstone Strategic Trust nor the Acquiring Fund
is in, and the execution, delivery and performance of this Agreement
will not result in, a material violation of Touchstone Strategic
Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
Touchstone Strategic Trust or the Acquiring Fund is a party or by
which Touchstone Strategic Trust or the Acquiring Fund are bound;
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened against Touchstone Strategic Trust or the
Acquiring Fund or any of their properties or assets, except as
previously disclosed in writing to the Portfolio or the Millennium
Portfolio. Neither Touchstone Strategic Trust nor the Acquiring Fund
knows of any facts which might form the basis for the institution of
such proceedings and neither Touchstone Strategic Trust nor the
Acquiring Fund is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects the business or the ability of
Touchstone Strategic Trust or the Acquiring Fund to consummate the
transactions contemplated herein;
(g) The Statement of Assets and Liabilities of the Acquiring
Fund at March 31, 2003, audited by Ernst & Young LLP, independent
auditors, and a copy of which has been furnished to the Portfolio and
to the Millennium Portfolio, fairly and accurately reflects the
financial condition of the Acquiring Fund as of such date in
accordance with generally accepted accounting principles consistently
applied;
(h) Since March 31, 2003, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred. For the purposes of this subparagraph (h),
a decline in net asset value per share of the Acquiring Fund shares,
the discharge of Acquiring Fund liabilities or the redemption of
Acquiring Fund shares by Acquiring Fund Shareholders, shall not
constitute a material adverse change;
(i) At the Closing Date all material Federal and other tax
returns and reports of Touchstone Strategic Trust and the Acquiring
Fund required by law to have been filed by such date or due after
request for extension, if any, shall have been filed and are or will
be correct, and all Federal and other taxes shown as due or required
to be shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and, to the
best knowledge of Touchstone Strategic Trust and the Acquiring Fund,
no such return is currently under audit and no assessment has been
asserted with respect to such returns;
(j) For each taxable year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification
as a regulated investment company and has elected to be treated as
such;
(k) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable by the Acquiring Fund. The Acquiring
Fund does not have outstanding any options, warrants or other rights
to subscribe for or to purchase any Acquiring Fund Shares, nor is
there outstanding any security convertible into any Acquiring Fund
Shares;
39
(l) The execution, delivery and performance of this Agreement
will have been fully authorized prior to the Closing Date by all
necessary action, if any, on the part of the Trustees of Touchstone
Strategic Trust and this Agreement will constitute a valid and binding
obligation of the Acquiring Fund enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights, and to general equity principles;
(m) The Acquiring Fund Shares to be issued and delivered
(transferred on the Acquiring Fund's books) to the Portfolio and to
the Millennium Portfolio for the accounts of the Portfolio
Shareholders and for the accounts of the Millennium Portfolio
Shareholders, pursuant to the terms of this Agreement, will, at the
Closing Date, have been duly authorized and, when so issued and
delivered, will be duly and validly issued Acquiring Fund Shares, and
will be fully paid and non-assessable by the Acquiring Fund;
(n) The information to be furnished by the Acquiring Fund for
use in registration statements, proxy materials and other documents
which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with Federal
securities and other laws and regulations applicable thereto;
(o) The Proxy Statement to be included in the Registration
Statement (only insofar as it relates to Touchstone Strategic Trust
and the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statement therein, in
light of the circumstances under which such statements were made, not
materially misleading; and
(p) Touchstone Strategic Trust and the Acquiring Fund each
agrees to use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and such of the
state blue sky or securities laws as may be necessary in order to
continue their operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND, THE PORTFOLIO AND THE MILLENNIUM PORTFOLIO
The following covenants of the Acquiring Fund and of the Portfolio and of
the Millennium Portfolio, as applicable, are made respectively by Touchstone
Strategic Trust and by the Performance Funds and by the Millennium Funds:
5.1 The Acquiring Fund and the Portfolio and the Millennium
Portfolio each will operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include the declaration and
payment of customary dividends and distributions and any other
distribution that may be advisable.
5.2 The Portfolio and the Millennium Portfolio will each call a
meeting of their Shareholders to consider and act upon this Agreement
and to take all other action necessary to obtain approval of the
transactions contemplated herein.
5.3 The Portfolio and the Millennium Portfolio each covenant
that the Acquiring Fund Shares to be issued hereunder are not being
acquired for the purpose of making any distribution thereof other than
in accordance with the terms of this Agreement.
5.4 The Portfolio and the Millennium Portfolio will each assist
the Acquiring Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the beneficial ownership of the shares
of the Portfolio and of the Millennium Portfolio.
5.5 Subject to the provisions of this Agreement, the Acquiring
Fund and the Portfolio and the Millennium Portfolio will each take, or
cause to be taken, all actions and do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
40
5.6 The Portfolio and the Millennium Portfolio will each provide
the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus (the "Prospectus") which will include the
Proxy Statement referred to in paragraph 4.1(n), all to be included in
a Registration Statement on Form N-14 of the Touchstone Strategic
Trust (the "Registration Statement"), in compliance with the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the 1940 Act, in connection with the meetings of the Portfolio
Shareholders and the Millennium Portfolio Shareholders to consider
approval of this Agreement and the transactions contemplated herein
(the "Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PERFORMANCE FUNDS AND THE
PORTFOLIO AND THE MILLENNIUM FUNDS AND THE MILLENNIUM PORTFOLIO
The obligations of the Performance Funds and the Portfolio and the
Millennium Funds and the Millennium Portfolio to consummate the transactions
provided for herein shall be subject, at their election, to the performance by
Touchstone Strategic Trust and the Acquiring Fund of all the obligations to be
performed by Touchstone Strategic Trust and the Acquiring Fund hereunder on or
before the Closing Date and, in addition thereto, to the following further
conditions:
6.1 All representations and warranties of Touchstone Strategic
Trust and the Acquiring Fund contained in this Agreement shall be true
and correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date; and
6.2 Touchstone Strategic Trust shall have delivered to the
Performance Funds and to the Millennium Funds, on the Closing Date, a
certificate executed in the name of Touchstone Strategic Trust by
Touchstone Strategic Trust's President and Treasurer, in a form
reasonably satisfactory to the Performance Funds and to the Millennium
Funds and dated as of the Closing Date, to the effect that the
representations and warranties of the Touchstone Strategic Trust and
the Acquiring Fund made in this Agreement are true and correct at and
as of the Closing Date, except as these representations and warranties
may be affected by the transactions contemplated by this Agreement and
as to such other matters as Touchstone Strategic Trust shall
reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF TOUCHSTONE STRATEGIC TRUST AND THE
ACQUIRING FUND
The obligations of Touchstone Strategic Trust and the Acquiring Fund to
complete the transactions provided for herein shall be subject, at their
election, to the performance by the Performance Funds and the Millennium Funds
and the Portfolio and the Millennium Portfolio of all of the obligations to be
performed by them hereunder on or before the Closing Date and, in addition
thereto, to the following conditions:
7.1 All representations and warranties of the Performance Funds
and the Millennium Funds and the Portfolio and the Millennium
Portfolio contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as these
representations and warranties may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date;
7.2 The Performance Funds and the Millennium Funds shall each
have delivered to Touchstone Strategic Trust statements of the
Portfolio's and of the Millennium Portfolio's assets and liabilities,
as of the Closing Date, each certified by the Treasurer of the
Performance Funds and the Millennium Funds; and
7.3 The Performance Funds and the Millennium Funds shall each
have delivered to Touchstone Strategic Trust, on the Closing Date,
certificates executed in their
41
respective names and in the Portfolio's and Millennium Portfolio's
names by the Performance Funds' President and Treasurer and by the
Millennium Funds' President and Treasurer, in form and substance
satisfactory to Touchstone Strategic Trust and dated as of the Closing
Date, to the effect that the representations and warranties of the
Performance Funds and the Millennium Funds and the Portfolio and the
Millennium Portfolio, with respect to the Performance Funds and the
Millennium Funds and the Portfolio and the Millennium Portfolio made
in this Agreement are true are correct at and as of the Closing Date,
except as these representations and warranties may be affected by the
transactions contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
PORTFOLIO AND THE MILLENNIUM PORTFOLIO
If any of the conditions set forth below do not exist on or before the
Closing Date, with respect to the Portfolio or the Millennium Portfolio or the
Acquiring Fund, then the other party to this Agreement shall, at its option, not
be required to consummate the transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of beneficial interest of the Portfolio and of the
Millennium Portfolio in accordance with the provisions of each of the
Performance Funds' and the Millennium Funds' Declaration of Trust and
By-Laws and copies of the resolutions evidencing such approvals shall
have been delivered to the Acquiring Fund. Notwithstanding anything
herein to the contrary, neither Touchstone Strategic Trust nor the
Acquiring Fund nor the Performance Funds nor the Portfolio nor the
Millennium Funds nor the Millennium Portfolio may waive the conditions
set forth in this paragraph 8.1;
8.2 All consents of other parties and all other consents, orders
and permits of Federal, state and local regulatory authorities deemed
necessary by Touchstone Strategic Trust or the Performance Funds or
the Millennium Funds to permit consummation, in all material respects,
of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or
properties of the Touchstone Strategic Trust or the Acquiring Fund or
the Performance Funds or the Millennium Funds or the Portfolio or the
Millennium Portfolio, provided that any party hereto may, for itself,
waive any of such conditions;
8.3 The Registration Statement shall have become effective under
the 1933 Act and no stop orders suspending the effectiveness thereof
shall have been issued; and
8.4 The Selling Fund shall have declared a dividend or dividends
which, together with all previous such dividends shall have the effect
of distributing to the Selling Fund Shareholders all of the Selling
Fund's investment company taxable income for all taxable periods
ending on the Closing Date (computed without regard to any deduction
for dividends paid) and all of the net capital gains realized in all
taxable periods ending on the Closing Date (after reduction for any
capital loss carryforward).
8.5 The Company and the Trust shall have received a favorable
opinion of Sullivan & Worcester LLP substantially to the effect that,
for federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange
solely for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the liabilities of the Selling Fund followed by the
distribution of the Acquiring Fund Shares to the Selling Fund
Shareholders in dissolution and liquidation of the Selling Fund will
constitute a "reorganization" within the meaning of Section
368(a)(1)(D) of the Code, and the Acquiring Fund and the Selling Fund
will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.
42
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund
of the liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of the liabilities of the Selling Fund or upon the
distribution (whether actual or constructive) of the Acquiring Fund
Shares to Selling Fund Shareholders in exchange for their shares of
the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the
Acquiring Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis of the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the
Reorganization will be the same as the aggregate tax basis of the
Selling Fund shares held by such Selling Fund Shareholder immediately
prior to the Closing, and the holding period of the Acquiring Fund
Shares received by each Selling Fund Shareholder will include the
period during which the Selling Fund shares exchanged therefor were
held by such Selling Fund Shareholder (provided the Selling Fund
shares were held as capital assets on the date of the Closing).
(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Selling Fund immediately prior to the Closing, and the holding period
of the assets of the Selling Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the
Selling Fund.
8.6 The Acquiring Fund shall have received from Ernst & Young
LLP a letter addressed to the Acquiring Fund, in form and substance
satisfactory to the Acquiring Fund, to the effect that:
(a) they are independent auditors with respect to the Selling
Fund within the meaning of the 1933 Act and the applicable published
rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the
Capitalization Table appearing in the Registration Statement and
Prospectus/Proxy Statement has been obtained from and is consistent
with the accounting records of the Selling Fund;
(c) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the pro forma
financial statements that are included in the Registration Statement
and Prospectus/Proxy Statement agree to the underlying accounting
records of the Acquiring Fund and the Selling Fund or with written
estimates provided by each Fund's management, and were found to be
mathematically correct; and
(d) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the data
utilized in the calculations of the pro forma expense ratios appearing
in the Registration Statement and Prospectus/Proxy Statement agree
with underlying accounting records of the Selling Fund or with written
estimates by the Selling Fund's management and were found to be
mathematically correct.
43
In addition, unless waived by the Acquiring Fund, the Acquiring Fund
shall have received from Ernst & Young LLP a letter addressed to the
Acquiring Fund dated on the Closing Date, in form and substance
satisfactory to the Acquiring Fund, to the effect that on the basis of
limited procedures agreed upon by the Acquiring Fund (but not an
examination in accordance with generally accepted auditing standards),
the net asset value per share of the Selling Fund as of the Valuation
Date was computed and the valuation of the portfolio was consistent in
the valuation practices of the Acquiring Fund.
8.7 The Selling Fund shall have received from Tait Weller &
Baker LLP a letter addressed to the Selling Fund, in form and
substance satisfactory to the Selling Fund, to the effect that:
(a) they are independent auditors with respect to the
Acquiring Fund within the meaning of the 1933 Act and the applicable
published rules and regulations thereunder;
(b) they had performed limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards) which consisted
of a reading of any unaudited pro forma financial statements included
in the Registration Statement and Prospectus/Proxy Statement, and
making inquiries of appropriate officials of the Trust responsible for
financial and accounting matters whether such unaudited pro forma
financial statements comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder;
(c) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the
Capitalization Table appearing in the Registration Statement and
Prospectus/Proxy Statement has been obtained from and is consistent
with the accounting records of the Acquiring Fund; and
(d) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally
accepted auditing standards), the data utilized in the calculations of
the pro forma expense ratios appearing in the Registration Statement
and Prospectus/Proxy Statement agree with underlying accounting
records of the Acquiring Fund or with written estimates by the
Acquiring Fund's management and were found to be mathematically
correct.
8.8 The change of the Acquiring Fund from a diversified series
of the Trust to a non-diversified series of the Trust upon completion
of the Reorganization shall have been approved by the requisite vote
of the holders of the outstanding shares of the Acquiring Fund in
accordance with the provisions of the Trust's Agreement and
Declaration of Trust and Bylaws.
9. BROKERAGE FEES AND EXPENSES
9.1 Touchstone Strategic Trust and the Performance Funds and the
Millennium Funds each represents and warrants to the others that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2 Navellier Management Inc. will bear the aggregate expenses
and costs of its solicitation of this Proxy Solicitation regarding the
Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 Touchstone Strategic Trust and the Performance Funds and
the Millennium Funds agree that no party to this Agreement has made
any representation, warranty
44
or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in
this Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by any party by resolution of the party's Board of Trustees or
Board of Trustees and resolution passed by the requisite number of Shareholders
of that party at any time prior to the Closing Date if circumstances should
develop that make proceeding with the Agreement inadvisable.
12. WAIVER
Touchstone Strategic Trust and the Performance Funds and the Millennium
Funds, by mutual consent of their respective Boards of Trustees, may waive in
writing any condition to their respective obligations hereunder, except as
provided herein.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of Touchstone
Strategic Trust and the Performance Funds and the Millennium Funds; provided,
however, that following the meetings of the Portfolio Shareholders and of the
Millennium Portfolio Shareholders called pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be issued to the Portfolio
Shareholders or to the Millennium Portfolio Shareholders under this Agreement to
the detriment of such Shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to Touchstone Strategic Trust at
221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202, or to the Performance
Funds or the Millennium Funds at One East Liberty Street, Third Floor, Reno,
Nevada 89501.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
45
15.5 It is expressly agreed that the obligations of the
Performance Funds and of the Millennium Funds and of the Portfolio and
of the Millennium Portfolio hereunder shall not be binding upon any of
the Trustees, Shareholders, nominees, officers, agents or employees of
the Performance Funds and of the Millennium Funds personally, but
shall bind only the Trust property of the Performance Funds and the
Millennium Funds and the Portfolio and the Millennium Portfolio, as
provided in the Declarations of Trust of the Performance Funds and of
the Millennium Funds. The execution and delivery by such officers of
the Performance Funds and of the Millennium Funds shall not be deemed
to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust
property of the Performance Funds and of the Millennium Funds and the
Portfolio and the Millennium Portfolio as provided in the Declarations
of Trust of the Performance Funds and of the Millennium Funds.
15.6 It is expressly agreed that the obligations of the
Touchstone Strategic Trust and the Acquiring Fund hereunder shall not
be binding upon any of the Trustees, Shareholders, nominees, officers,
agents or employees of Touchstone Strategic Trust personally, but
shall bind only the trust property of the Touchstone Strategic Trust
and the Acquiring Fund, as provided in Touchstone Strategic Trust's
Declaration of Trust. The execution and delivery by such officers of
Touchstone Strategic Trust shall not be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Touchstone
Strategic Trust and the Acquiring Fund, as provided in the Touchstone
Strategic Trust's Declaration of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President and attested by its Secretary.
Attest: TOUCHSTONE STRATEGIC TRUST
By: By:
------------------------- -------------------------
Secretary President
Attest: THE NAVELLIER MILLENNIUM FUNDS
By: By:
------------------------- -------------------------
Secretary President
Attest: THE NAVELLIER PERFORMANCE FUNDS
BY: By:
------------------------- -------------------------
Secretary President
46
APPENDIX B
INVESTMENT ADVISORY AGREEMENT
TOUCHSTONE STRATEGIC TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of May 1, 2000, amended December
31, 2002, by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the
"Advisor"), and TOUCHSTONE STRATEGIC TRUST, a Massachusetts business trust
created pursuant to an Agreement and Declaration of Trust dated November 18,
1982, as amended from time to time (the "Trust").
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended, (the "1940
Act"); and
WHEREAS, shares of beneficial interest in the Trust are divided into
separate series (each, along with any series which may in the future be
established, a "Fund"); and
WHEREAS, the Trust desires to avail itself of the services, information,
advice, assistance and facilities of an investment advisor and to have an
investment advisor perform for it various investment advisory and research
services and other management services; and
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and desires to provide investment
advisory services to the Trust;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE ADVISOR. The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Fund subject to the
control and direction of the Trust's Board of Trustees, for the period on the
terms hereinafter set forth. The Advisor hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. In
providing the services and assuming the obligations set forth herein, the
Advisor may, at its expense, employ one or more sub-advisors for any Fund. Any
agreement between the Advisor and a sub-advisor shall be subject to the renewal,
termination and amendment provisions of paragraph 10 hereof. The Advisor
undertakes to provide the following services and to assume the following
obligations:
47
a) The Advisor will manage the investment and reinvestment of
the assets of each Fund, subject to and in accordance with
the respective investment objectives and policies of each
Fund and any directions which the Trust's Board of
Trustees may issue from time to time. In pursuance of the
foregoing, the Advisor may engage separate investment
advisors ("Sub-Advisor(s)") to make all determinations
with respect to the investment of the assets of each Fund,
to effect the purchase and sale of portfolio securities
and to take such steps as may be necessary to implement
the same. Such determination and services by each
Sub-Advisor shall also include determining the manner in
which voting rights, rights to consent to corporate action
and any other rights pertaining to the portfolio
securities shall be exercised. The Advisor shall, and
shall cause each Sub-Advisor to, render regular reports to
the Trust's Board of Trustees concerning the Trust's and
each Fund's investment activities.
b) The Advisor shall, or shall cause the respective
Sub-Advisor(s) to place orders for the execution of all
portfolio transactions, in the name of the respective Fund
and in accordance with the policies with respect thereto
set forth in the Trust's registration statements under the
1940 Act and the Securities Act of 1933, as such
registration statements may be amended from time to time.
In connection with the placement of orders for the
execution of portfolio transactions, the Advisor shall
create and maintain (or cause the Sub-Advisors to create
and maintain) all necessary brokerage records for each
Fund, which records shall comply with all applicable laws,
rules and regulations, including but not limited to
records required by Section 31(a) of the 1940 Act. All
records shall be the property of the Trust and shall be
available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person
retained by the Trust. Where applicable, such records
shall be maintained by the Advisor (or Sub-Advisor) for
the periods and in the places required by Rule 31a-2 under
the 1940 Act.
c) In the event of any reorganization or other change in the
Advisor, its investment principals, supervisors or members
of its investment (or comparable) committee, the Advisor
shall give the Trust's Board of Trustees written notice of
such reorganization or change within a reasonable time
(but not later than 30 days) after such reorganization or
change.
d) The Advisor shall bear its expenses of providing services
to the Trust pursuant to this Agreement except such
expenses as are undertaken by the Trust. In addition, the
Advisor shall pay the salaries and fees, if any, of all
Trustees, officers and employees of the Trust who are
affiliated persons, as defined in Section 2(a)(3) of the
1940 Act, of the Advisor.
48
e) The Advisor will manage, or will cause the Sub-Advisors to
manage, the Fund assets and the investment and
reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the
Internal Revenue Code of 1986, as amended.
3. EXPENSES. The Trust shall pay the expenses of its operation, including but
not limited to (i) charges and expenses for Trust accounting, pricing and
appraisal services and related overhead, (ii) the charges and expenses of the
Trust's auditors; (iii) the charges and expenses of any custodian, transfer
agent, plan agent, dividend disbursing agent and registrar appointed by the
Trust with respect to the Funds; (iv) brokers' commissions, and issue and
transfer taxes, chargeable to the Trust in connection with securities
transactions to which the Trust is a party; (v) insurance premiums, interest
charges, dues and fees for Trust membership in trade associations and all taxes
and fees payable by the Trust to federal, state or other governmental agencies;
(vi) fees and expenses involved in registering and maintaining registrations of
the Trust and/or shares of the Trust with the SEC, state or blue sky securities
agencies and foreign countries, including the preparation of Prospectuses and
Statements of Additional Information for filing with the SEC; (vii) all expenses
of meetings of Trustees and of shareholders of the Trust and of preparing,
printing and distributing prospectuses, notices, proxy statements and all
reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Trust; (ix) compensation of Trustees of the
Trust; and (x) interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and obligations
assumed hereunder by the Advisor, the Trust shall pay to
the Advisor monthly a fee that is equal on an annual basis
to that percentage of the average daily net assets of each
Fund set forth on Schedule 1 attached hereto (and with
respect to any future Fund, such percentage as the Trust
and the Advisor may agree to from time to time). Such fee
shall be computed and accrued daily. If the Advisor serves
as investment advisor for less than the whole of any
period specified in this Section 4a, the compensation to
the Advisor shall be prorated. For purposes of calculating
the Advisor's fee, the daily value of each Fund's net
assets shall be computed by the same method as the Trust
uses to compute the net asset value of that Fund.
b) The Advisor will pay all fees owing to each Sub-Advisor,
and the Trust shall not be obligated to the Sub-Advisors
in any manner with respect to the compensation of such
Sub-Advisors.
c) The Advisor reserves the right to waive all or a part of
its fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Advisor as
stockholders, officers or otherwise, and that stockholders and officers of the
Advisor are or may become similarly interested in the Trust, and that the
Advisor may become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other
49
cases, the parties may use such names to the extent that the use is approved by
the party named, it being agreed that in no event shall such approval be
unreasonably withheld.
The Trustees of the Trust acknowledge that the Advisor has
reserved for itself the rights to the name "Touchstone Strategic Trust" (or any
similar names) and that use by the Trust of such name shall continue only with
the continuing consent of the Advisor, which consent may be withdrawn at any
time, effective immediately, upon written notice thereof to the Trust.
7. LIMITATION OF LIABILITY OF THE ADVISOR.
a) Absent willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder
on the part of the Advisor, the Advisor shall not be
subject to liability to the Trust or to any shareholder in
any Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 7, the term
"Advisor" shall include Touchstone Advisors, Inc. and/or
any of its affiliates and the directors, officers and
employees of Touchstone Advisors, Inc. and/or any of its
affiliates.
b) The Trust will indemnify the Advisor against, and hold it
harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees
and expenses) resulting from acts or omissions of the
Trust. Indemnification shall be made only after: (i) a
final decision on the merits by a court or other body
before whom the proceeding was brought that the Trust was
liable for the damages claimed or (ii) in the absence of
such a decision, a reasonable determination based upon a
review of the facts, that the Trust was liable for the
damages claimed, which determination shall be made by
either (a) the vote of a majority of a quorum of Trustees
of the Trust who are neither "interested persons" of the
Trust nor parties to the proceeding ("disinterested
non-party Trustees") or (b) an independent legal counsel
satisfactory to the parties hereto, whose determination
shall be set forth in a written opinion. The Advisor shall
be entitled to advances from the Trust for payment of the
reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the
manner and to the fullest extent that would be permissible
under the applicable provisions of the General Corporation
Law of Ohio. The Advisor shall provide to the Trust a
written affirmation of its good faith belief that the
standard of conduct necessary for indemnification under
such law has been met and a written undertaking to repay
any such advance if it should ultimately be determined
that the standard of conduct has not been met. In
addition, at least one of the following additional
conditions shall be met: (i) the Advisor shall provide
security in form and amount acceptable to the Trust for
its undertaking; (ii) the Trust is insured against losses
arising by reason of the advance; or (iii) a majority of a
quorum of the Trustees of the Trust, the members of which
majority are disinterested non-party Trustees, or
independent legal counsel in a written opinion, shall have
determined, based on a review of facts readily available
to the Trust at the time the advance is proposed to be
made, that there is reason to believe that the Advisor
will ultimately be found to be entitled to
indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the shares of any Fund nor from any Trustee, officer,
employee or agent of the Trust.
50
9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of one
year from the date hereof and it shall continue
indefinitely thereafter as to each Fund, provided that
such continuance is specifically approved by the parties
hereto and, in addition, at least annually by (i) the vote
of holders of a majority of the outstanding voting
securities of the affected Fund or by vote of a majority
of the Trust's Board of Trustees and (ii) by the vote of a
majority of the Trustees who are not parties to this
Agreement or interested persons of the Advisor, cast in
person at a meeting called for the purpose of voting on
such approval.
b) This Agreement may be terminated at any time, with respect
to any Fund(s), without payment of any penalty, by the
Trust's Board of Trustees or by a vote of the majority of
the outstanding voting securities of the affected Fund(s)
upon 60 days' prior written notice to the Advisor and by
the Advisor upon 60 days' prior written notice to the
Trust.
c) This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of
Trustees and, if required by applicable SEC rules and
regulations, a vote of the majority of the outstanding
voting securities of any Fund affected by such change.
This Agreement shall terminate automatically in the event
of its assignment.
d) The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the
meaning set forth for such terms in the 1940 Act.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Agreement and Declaration of Trust, dated as of November
18, 1982, the obligations of this Agreement are not binding upon any of the
Trustees or shareholders of the Trust individually, but bind only the Trust
estate.
TOUCHSTONE STRATEGIC TRUST
By:
-----------------------
Patrick T. Bannigan
President
TOUCHSTONE ADVISORS, INC.
By:
-----------------------
Michael S. Spangler
Vice President
51
SCHEDULE 1
LARGE CAP GROWTH FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.75% on the first
$200 million of average daily net assets; 0.70% of the next $300 million of
average daily net assets; and 0.50% of such assets in excess of $500 million.
GROWTH OPPORTUNITIES FUND
The Fund pays the Advisor a fee equal to the annual rate of 1.00% on the first
$50 million of average daily net assets; 0.90% of the next $50 million of
average daily net assets; 0.80% of the next $100 million of average daily net
assets; and 0.75% of such assets in excess of $200 million.
International Equity Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.95% on the first
$100 million of average daily net assets; 0.90% of the next $100 million of
average daily net assets; 0.85% of the next $100 million of average daily net
assets; and 0.80% of such assets in excess of $300 million.
Emerging Growth Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.80% of average
daily net assets.
Enhanced 30 Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.65% on the first
$100 million of average daily net assets; 0.60% of the next $100 million of
average daily net assets; 0.55% of the next $100 million of average daily net
assets; and 0.50% of such assets in excess of $300 million.
Value Plus Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.75% on the first
$100 million of average daily net assets; 0.70% of the next $100 million of
average daily net assets; 0.65% of the next $100 million of average daily net
assets; and 0.60% of such assets in excess of $300 million.
52
Small Cap Growth Fund
The Fund pays the Advisor a fee equal to the annual rate of 1.25% of average
daily net assets.
53
APPENDIX C
SUB-ADVISORY AGREEMENT
GROWTH FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of ___________, 2003 by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the Investment
Advisers Act of 1940, as amended, and has been retained by Touchstone Strategic
Trust (the "Trust"), a Massachusetts business trust organized pursuant to an
Agreement and Declaration of Trust dated November 18, 1982 and registered as an
open-end diversified management investment company under the Investment Company
Act of 1940 (the "1940 Act"), to provide investment advisory services to the
Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to the Sub-Advisor by the Advisor (the "Fund Assets"), subject to
the control and direction of the Advisor and the Trust's Board of Trustees, for
the period and on the terms hereinafter set forth. The Sub-Advisor hereby
accepts such employment and agrees during such period to render the services and
to perform the duties called for by this Agreement for the compensation herein
provided. The Sub-Advisor shall at all times maintain its registration as an
investment advisor under the Investment Advisers Act of 1940 and shall otherwise
comply in all material respects with all applicable laws and regulations, both
state and federal. The Sub-Advisor shall for all purposes herein be deemed an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust or the Fund.
54
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the following
services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment
of the assets of the Fund, subject to and in accordance with the
investment objectives, policies and restrictions of the Fund and any
directions which the Advisor or the Trust's Board of Trustees may give
from time to time with respect to the Fund. In furtherance of the
foregoing, the Sub-Advisor will make all determinations with respect to
the investment of the assets of the Fund and the purchase and sale of
portfolio securities and shall take such steps as may be necessary or
advisable to implement the same. The Sub-Advisor also will determine
the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities will
be exercised. The Sub-Advisor will render regular reports to the
Trust's Board of Trustees and to the Advisor (or such other advisor or
advisors as the Advisor shall engage to assist it in the evaluation of
the performance and activities of the Sub-Advisor). Such reports shall
be made in such form and manner and with respect to such matters
regarding the Fund and the Sub-Advisor as the Trust or the Advisor
shall from time to time request.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the
Sub-Advisor as the same is applicable to the Fund, (iii) access to the
individual(s) responsible for day-to-day management of the Fund for
marketing conferences, teleconferences and other activities involving
the promotion of the Fund, subject to the reasonable request of the
Advisor, (iv) permission to use biographical and historical data of the
Sub-Advisor and individual manager(s), and (v) permission to use the
names of clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to records required by
Section 31(a) of the 1940 Act. All records shall be the property of the
Trust and shall be available for inspection and use by the Securities
and Exchange Commission (the "SEC"), the Trust or any person retained
by the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
Sub-Advisor's primary objective shall be to obtain the most favorable
price and execution available for the Fund, and in placing such orders
the Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund
(including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected, the ability
to effect the transaction at all where a large block is involved and
the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized,
to the extent authorized by law (including, without limitation, Section
28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), to pay a broker or dealer who provides research services to the
Sub-Advisor an amount of commission for effecting a
55
portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the broker
or dealer, but only if the Sub-Advisor determines in good faith that
the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer
viewed in terms of the particular transaction or the Sub-Advisor's
overall responsibilities with respect to discretionary accounts that it
manages, and that the Fund derives or will derive a reasonably
significant benefit from such research services. The Sub-Advisor will
present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information
as the Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing
services to the Fund pursuant to this Agreement except such expenses as
are undertaken by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the
investment and reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% of the
average daily net assets of the Fund. Such fee shall be computed and
accrued daily. If the Sub-Advisor serves in such capacity for less than
the whole of any period specified in this Section 3a, the compensation
to the Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Fund's net assets shall be
computed by the same method as the Trust uses to compute the net asset
value of the Fund for purposes of purchases and redemptions of shares
thereof.
b. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor may
perform investment advisory services for various other clients, including other
investment companies. The Sub-Advisor will report to the Board of Trustees of
the Trust (at regular quarterly meetings and at such other times as such Board
of Trustees reasonably shall request) (i) the financial condition and prospects
of the Sub-Advisor, (ii) the nature and amount of transactions affecting the
Fund that involve the Sub-Advisor and affiliates of the Sub-Advisor, (iii)
information regarding any potential conflicts of interest arising by reason of
its continuing provision of advisory services to the Fund and to its other
accounts, and (iv) such other information as the Board of Trustees shall
reasonably request regarding the Fund, the Fund's performance, the services
provided by the Sub-Advisor to the Fund as compared to its other accounts and
the plans of, and the capability of, the Sub-Advisor with respect to providing
future services to the Fund and its other accounts. At least annually, the
Sub-Advisor shall report to the Trustees the total number and type of such other
accounts and the approximate total asset value thereof (but not the identities
of the beneficial owners of such accounts). The Sub-Advisor agrees to submit to
the Trust a statement defining its policies with respect to the allocation of
business among the Fund and its other clients.
56
It is understood that the Sub-Advisor may become interested in the Trust as a
shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its Form
ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of the
Sub-Advisor in any prospectus, sales literature or other material relating to
the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject
to liability to the Advisor, the Trust or to any shareholder in the Fund for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the Trust's
obligations to the Sub-Advisor under this Agreement (or indirectly under the
Advisory Agreement) shall be limited in any event to the assets of the Fund and
(ii) the Sub-Advisor shall not seek satisfaction of any such obligation from the
holders of shares of the Fund nor from any Trustee, officer, employee or agent
of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided for a period of two years from the
date hereof and it shall continue thereafter provided that such
continuance is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Fund or by
vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Fund, in any such case upon not less
57
than 60 days' prior written notice to the Sub-Advisor and (ii) by the
Sub-Advisor upon not less than 60 days' prior written notice to the
Advisor and the Trust. This Agreement shall terminate automatically in
the event of its assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or
shall be found to be invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and that of the Advisor
for this purpose shall be 221 East Fourth Street, Suite 300, Cincinnati, Ohio
45202 and that the address of the Sub-Advisor shall be One East Liberty, Third
Floor, Reno, Nevada 89501.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By:
------------------------------------
Name: Patrick Bannigan
Title: President
NAVELLIER MANAGEMENT, INC.
By:
------------------------------------
Name: Louis G. Navellier
Title: President
58
APPENDIX D
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS A SHARES OF MULTIPLE CLASS SERIES
AND FOR SINGLE CLASS SERIES OF
COUNTRYWIDE STRATEGIC TRUST
WHEREAS, Countrywide Strategic Trust (the "Trust"), an unincorporated business
trust organized under the laws of The Commonwealth of Massachusetts, is an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of which
may be designated as Class A Shares), whereas other Series will operate with a
single class of Shares, which Shares will be considered for purposes of this
Plan as Class A Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class A Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class A Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of the
Trust, the Trust may, directly or indirectly, engage in any activities related
to the distribution of Class A Shares, which activities may include, but are not
limited to, the following: (a) maintenance fees or other payments to the Trust's
principal underwriter and to securities dealers and others who are engaged in
the sale of Class A Shares and who may be advising shareholders of the Trust
regarding the purchase, sale or retention of Class A Shares; (b) expenses of
maintaining personnel (including personnel of organizations with which the Trust
has entered into agreements related to this Plan) who engage in or support
distribution of Class A Shares or who render shareholder support services not
otherwise provided by the
Trust's transfer agent, including, but not limited to, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (c) formulating
and implementing of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparing, printing and distributing sales
literature; (e) preparing, printing and distributing prospectuses and statements
of additional information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable. The Trust is authorized to engage in
59
the activities listed above, and in any other activities related to the
distribution of Class A Shares, either directly or through other persons with
which the Trust has entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to this Plan and
the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of .25% of the
average daily net asset value of the Class A Shares of any Series of the Trust.
Such payments for distribution activities may be made directly by the Class A
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class A Shares.
3. Term and Termination. This Plan shall become effective on the date hereof.
Unless terminated as herein provided, this Plan shall continue in effect for one
year from the date hereof and shall continue in effect for successive periods of
one year thereafter, but only so long as each such continuance is specifically
approved by votes of a majority of both (i) the Trustees of the Trust and (ii)
the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of
voting on such approval. This Plan may be terminated with respect to any Series
at any time by vote of a majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the 1940 Act) of the outstanding Class A Shares of such
Series of the Trust. In the event this Plan is terminated by any Series in
accordance with its terms, the obligations of the Class A Shares of such Series
to make payments to the Trust's principal underwriter pursuant to this Plan will
cease and such Series will not be required to make any payments for expenses
incurred after the date of termination.
60
4. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Section 2 hereof
unless such amendment is approved by a vote of the majority (as defined in the
1940 Act) of the outstanding Class A Shares of such Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3 hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
6. Quarterly Reports. The Treasurer of the Trust and the principal underwriter
shall provide to the Trustees and the Trustees shall review, at least quarterly,
a written report of the amounts expended pursuant to this Plan and any related
agreement, the purposes for which such expenditures were made and the allocation
of such expenditures as provided for in Section 7.
7. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the distribution fee charged to shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares
of a Series will be allocated at least annually to each class of Shares based
upon the ratio in which the sales of each class of Shares bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any related
agreement and all reports made pursuant to Section 6 hereof, for a period of not
less than six years from the date of this Plan, the agreements or such reports,
as the case may be, the first two years in an easily accessible place.
9. Limitation of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this Plan is executed on behalf of the Trustees
of the Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the date
set forth below.
Dated: October 29, 1999
Attest:
/s/ Tina D. Hosking By: /s/ Robert H. Leshner
- ------------------- --------------------------
Secretary President
61
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS B SHARES OF TOUCHSTONE STRATEGIC TRUST
WHEREAS, Touchstone Strategic Trust (the "Trust"), an unincorporated business
trust organized under the laws of The Commonwealth of Massachusetts, is an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of which
may be designated as Class B Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class B Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class B Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of the
Trust, the Trust may, directly or indirectly, engage in any activities related
to the distribution of Class B Shares, which activities may include, but are not
limited to, the following: (a) maintenance fees or other payments to the Trust's
principal underwriter and to securities dealers and others who are engaged in
the sale of Class B Shares and who may be advising shareholders of the Trust
regarding the purchase, sale or retention of Class B Shares; (b) expenses of
maintaining personnel (including personnel of organizations with which the Trust
has entered into agreements related to this Plan) who engage in or support
distribution of Class B Shares or who render shareholder support services not
otherwise provided by the Trust's transfer agent, including, but not limited to,
office space and equipment, telephone facilities and expenses, answering routine
inquiries regarding the Trust, processing shareholder transactions, and
providing such other shareholder services as the Trust may reasonably request;
(c) formulating and implementing of marketing and promotional activities,
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (d) preparing, printing
and distributing sales literature; (e) preparing, printing and distributing
prospectuses and statements of additional information and reports of the Trust
for recipients other than existing shareholders of the Trust; and (f) obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
related to the distribution of Class B Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to Section 1 and
the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount
62
calculated at the rate of .75% of the average daily net asset value of the Class
B Shares of any Series of the Trust. Such payments for distribution activities
may be made directly by the Class B Shares or the Trust's investment adviser or
principal underwriter may incur such expenses and obtain reimbursement from the
Class B Shares.
3. Maintenance Fee. In addition to the payments of compensation provided for
in Section 2 and in order to further enhance the distribution of its Class B
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid monthly, in an amount equal to an annual rate of .25% of the
daily net assets of the Class B Shares of the Trust. When requested by and at
the direction of the principal underwriter, the Trust shall pay a maintenance
fee to dealers based on the amount of Class B Shares sold by such dealers and
remaining outstanding for specified periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Class B Shares of the Trust. Any maintenance fees paid to dealers
shall reduce the maintenance fees otherwise payable to the principal
underwriter.
4. Term and Termination. This Plan shall become effective on the date hereof.
Unless terminated as herein provided, this Plan shall continue in effect for one
year from the date hereof and shall continue in effect for successive periods of
one year thereafter, but only so long as each such continuance is specifically
approved by votes of a majority of both (i) the Trustees of the Trust and (ii)
the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of
voting on such approval. This Plan may be terminated with respect to any Series
at any time by vote of a majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the 1940 Act) of the outstanding Class B Shares of such
Series of the Trust. In the event this Plan is terminated by any Series in
accordance with its terms, the obligations of the Class B Shares of such Series
to make payments to the Trust's principal underwriter pursuant to this Plan will
cease and such Series will not be required to make any payments for expenses
incurred after the date of termination.
5. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Sections 2 and 3
hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class B Shares of such Series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 4 hereof.
63
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
7. Quarterly Reports. The principal underwriter and the Treasurer of the Trust
shall provide to the Trustees and the Trustees shall review, at least quarterly,
a written report of the amounts expended pursuant to this Plan and any related
agreement, the purposes for which such expenditures were made and the allocation
of such expenditures as provided for in Section 8.
8. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the distribution fee charged to shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares
of a Series will be allocated at least annually to each class of Shares based
upon the ratio in which the sales of each class of Shares bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.
9. Recordkeeping. The Trust shall preserve copies of this Plan and any related
agreement and all reports made pursuant to Section 7 hereof, for a period of not
less than six years from the date of this Plan, the agreements or such reports,
as the case may be, the first two years in an easily accessible place.
10. Limitation of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this Plan is executed on behalf of the Trustees
of the Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: May 1, 2001
Attest:
/s/Tina D. Hosking By: /s/ Jill McGruder
- ------------------ -----------------
Secretary President
64
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS C SHARES OF COUNTRYWIDE STRATEGIC TRUST
WHEREAS, Countrywide Strategic Trust (the "Trust"), an unincorporated business
trust organized under the laws of The Commonwealth of Massachusetts, is an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of which
may be designated as Class C Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class C Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class C Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of the
Trust, the Trust may, directly or indirectly, engage in any activities related
to the distribution of Class C Shares, which activities may include, but are not
limited to, the following: (a) maintenance fees or other payments to the Trust's
principal underwriter and to securities dealers and others who are engaged in
the sale of Class C Shares and who may be advising shareholders of the Trust
regarding the purchase, sale or retention of Class C Shares; (b) expenses of
maintaining personnel (including personnel of organizations with which the Trust
has entered into agreements related to this Plan) who engage in or support
distribution of Class C Shares or who render shareholder support services not
otherwise provided by the Trust's transfer agent, including, but not limited to,
office space and equipment, telephone facilities and expenses, answering routine
inquiries regarding the Trust, processing shareholder transactions, and
providing such other shareholder services as the Trust may reasonably request;
(c) formulating and implementing of marketing and promotional activities,
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (d) preparing, printing
and distributing sales literature; (e) preparing, printing and distributing
prospectuses and statements of additional information and reports of the Trust
for recipients other than existing shareholders of the Trust; and (f) obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem advisable. The Trust is
authorized to engage in the activities listed above, and in any other activities
related to the distribution of Class C Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to Section 1 and
the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount
65
calculated at the rate of .75% of the average daily net asset value of the Class
C Shares of any Series of the Trust. Such payments for distribution activities
may be made directly by the Class C Shares or the Trust's investment adviser or
principal underwriter may incur such expenses and obtain reimbursement from the
Class C Shares.
3. Maintenance Fee. In addition to the payments of compensation provided for
in Section 2 and in order to further enhance the distribution of its Class C
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid monthly, in an amount equal to an annual rate of .25% of the
daily net assets of the Class C Shares of the Trust. When requested by and at
the direction of the principal underwriter, the Trust shall pay a maintenance
fee to dealers based on the amount of Class C Shares sold by such dealers and
remaining outstanding for specified periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Class C Shares of the Trust. Any maintenance fees paid to dealers
shall reduce the maintenance fees otherwise payable to the principal
underwriter.
4. Term and Termination. This Plan shall become effective on the date hereof.
Unless terminated as herein provided, this Plan shall continue in effect for one
year from the date hereof and shall continue in effect for successive periods of
one year thereafter, but only so long as each such continuance is specifically
approved by votes of a majority of both (i) the Trustees of the Trust and (ii)
the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of
voting on such approval. This Plan may be terminated with respect to any Series
at any time by vote of a majority of the Rule 12b-1 Trustees or by vote of a
majority (as defined in the 1940 Act) of the outstanding Class C Shares of such
Series of the Trust. In the event this Plan is terminated by any Series in
accordance with its terms, the obligations of the Class C Shares of such Series
to make payments to the Trust's principal underwriter pursuant to this Plan will
cease and such Series will not be required to make any payments for expenses
incurred after the date of termination.
5. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Sections 2 and 3
hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class C Shares of such Series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 4 hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
7. Quarterly Reports. The principal underwriter and the Treasurer of the Trust
shall provide to the Trustees and the Trustees shall review, at least quarterly,
a written report of the amounts expended pursuant to this Plan and any related
agreement, the purposes for which such expenditures were made and the allocation
of such expenditures as provided for in Section 8.
8. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the distribution fee charged to shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares
of a Series will be allocated at least annually to each class of Shares based
upon the ratio in which the sales of each class of Shares bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.
66
9. Recordkeeping. The Trust shall preserve copies of this Plan and any related
agreement and all reports made pursuant to Section 7 hereof, for a period of not
less than six years from the date of this Plan, the agreements or such reports,
as the case may be, the first two years in an easily accessible place.
10. Limitation of Liability. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this Plan is executed on behalf of the Trustees
of the Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: October 29, 1999
Attest:
/s/ Tina D. Hosking By: /s/ Robert H. Leshner
- ------------------- ---------------------
Secretary President
67
PROXY THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
OF
THE NAVELLIER MILLENNIUM FUNDS
One East Liberty Street, Third Floor
Reno, Nevada 89501
--------------------
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
August 22, 2003 (or another date shortly thereafter)
THIS PROXY IS SOLICITED BY THE TRUSTEES OF THE NAVELLIER MILLENNIUM FUNDS,
for use at a special meeting of the shareholders of The Navellier Large Cap
Growth Portfolio (the "Millennium Portfolio"), an investment portfolio offered
by The Navellier Millennium Funds (the " Millennium Funds") which meeting will
be held at 10:00 a.m., Pacific Standard Time, on August 22, 2003 OR ANOTHER DATE
SHORTLY THEREAFTER, at the offices of The Navellier Millennium Funds, One East
Liberty Street, Third Floor, Reno, Nevada 89501 (the "Meeting").
The undersigned shareholder of the Millennium Portfolio, revoking any and
all previous proxies heretofore given for shares of the Millennium Portfolio
held by the undersigned("Shares"), does hereby appoint Louis Navellier and
Samuel Kornhauser, and each and any of them, with full power to substitution to
each to be the attorneys and proxies of the undersigned (the "Proxies"), to
attend the Meeting of the shareholders of the Millennium Portfolio, and to
represent and direct the voting interests represented by the undersigned as of
the record date for said Meeting for the Proposal specified below.
This proxy, if properly executed, will be voted in the manner as directed
herein by the undersigned shareholder. Unless otherwise specified below in the
squares provided, the undersigned's vote will be cast "FOR" each Proposal. If no
direction is made for any Proposal, this proxy will be voted "FOR" any and all
such Proposals. In their discretion, the Proxies are authorized to transact and
vote upon such other matters and business as may come before the Meeting or any
adjournments thereof.
68
Please mark | |
your votes as | X |
indicated in | |
this example
Proposal 1 To approve a proposed Agreement and Plan of
Reorganization (the "Plan"), whereby the Navellier Large
Cap Growth Portfolio of the Navellier Millennium Funds
(the " Millennium Portfolio") and the Navellier Large Cap
Growth Portfolio of The Navellier Performance Funds (the
"Portfolio") would transfer all of their assets to the
Large Cap Growth Fund, a portfolio of the Touchstone
Strategic Trust (the "Acquiring Fund") in exchange for
shares of beneficial interest in the Acquiring Fund that
would then be distributed to the shareholders of the
Portfolio and to the Shareholders of the Millennium
Portfolio pro rata. Also, as part of the Plan, the
Acquiring Fund would assume all valid liabilities of the
Portfolio and of the Millennium Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
To avoid the expense of adjourning the Meeting to a subsequent date, please
return this proxy in the enclosed self-addressed, postage-paid envelope. THIS
PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE NAVELLIER PERFORMANCE FUNDS
WHICH RECOMMEND A VOTE FOR PROPOSAL 1.
Dated _______________, 2003
------------------------ ----------------
Signature of Shareholder Number of shares
------------------------ ----------------
Signature of Shareholder Number of shares
This proxy may be revoked by the shareholder(s) at any time
prior to the special meeting.
NOTE: Please sign exactly as your name appears hereon. If shares are registered
in more than one name, all registered shareholders should sign this proxy; but
if one shareholder signs, that signature binds the other shareholder. When
signing as an attorney, executor, administrator, agent, trustee, or guardian, or
custodian for a minor, please give full title as such. If a corporation, please
sign in full corporate name by an authorized person. If a partnership, please
sign in partnership name by an authorized person.
69
PART B
TOUCHSTONE STRATEGIC TRUST
(THE LARGE CAP GROWTH FUND)
STATEMENT OF ADDITIONAL INFORMATION
DATED JULY 18, 2003
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the Combined Prospectus/Proxy Statement of
Touchstone Strategic Trust (the "Fund"), dated July 18, 2003 for the special
meeting (the "Millennium Meeting") of the Shareholders of the Navellier Large
Cap Growth Portfolio (the "Millennium Portfolio") of the Navellier Millennium
Funds, a copy of which Prospectus/ Proxy Statement may be obtained, without
charge, by contacting the Millennium Portfolio, c/o Navellier Securities Corp.
at One East Liberty, Third Floor, Reno, Nevada 89501; Tel: 1-800-887-8671. This
Statement of Additional Information contains additional and more detailed
information about the operations and activities of the Large Cap Growth Fund, a
portfolio of the Touchstone Strategic Trust (the "Acquiring Fund") and the
operations and activities of the Portfolio and the Millennium Portfolio.
The combined Prospectus/Proxy Statement describes certain transactions
contemplated by the proposed merger of the Portfolio and of the Millennium
Portfolio into the Acquiring Fund (the "Reorganization") whereby the Acquiring
Fund would acquire all of the assets of the Portfolio and of the Millennium
Portfolio in exchange solely for shares of beneficial interest in the Acquiring
Fund and the assumption by the Acquiring Fund of all of the valid liabilities of
the Portfolio and of the Millennium Portfolio.
70
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PROSPECTUS OF TOUCHSTONE STRATEGIC TRUST DATED AUGUST 1, 2002 (incorporated
herein by reference to Registrant's August 1, 2002 N-1A post-effective amendment
No. 47 EDGAR filing)..............................
STATEMENT OF ADDITIONAL INFORMATION FOR TOUCHSTONE STRATEGIC TRUST DATED AUGUST
1, 2002 (incorporated herein by reference to Registrant's August 1, 2002 N-1A
post-effective amendment No. 47 EDGAR filing).......
PROSPECTUS OF THE NAVELLIER PERFORMANCE FUNDS DATED MAY 1, 2003 (incorporated
herein by reference to the April 30, 2003 filing on form N-1A by the Navellier
Performance Funds, post-effective amendment No. 25 EDGAR filing
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER PERFORMANCE FUNDS DATED
MAY 1, 2003 (incorporated herein by reference to the April 30, 2003 filing on
form N-1A by the Navellier Performance Funds, post-effective amendment No. 25
EDGAR filing)
PROSPECTUS OF THE NAVELLIER MILLENNIUM FUNDS DATED MAY 1, 2003 (incorporated
herein by reference to the April 30, 2003 filing on form N-1A by The Navellier
Millennium Funds, post-effective amendment No. 9 EDGAR filing)
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER MILLENNIUM FUNDS DATED MAY
1, 2003 (incorporated by reference to the April 30, 2003 filing on form N-1A by
The Navellier Millennium Funds post-effective amendment No. 9 EDGAR filing)
CURRENT AUDITED ANNUAL REPORT OF TOUCHSTONE STRATEGIC TRUST AS OF MARCH 31, 2003
(incorporated by reference to the March 31, 2002 filing on form N-1A
post-effective amendment No. 47 EDGAR filing)
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER PERFORMANCE FUNDS AS OF DECEMBER
31, 2002 (incorporated herein by reference to the April 30, 2003 filing on form
N-1A post effective amendment No. 25 EDGAR filing).......
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER MILLENNIUM FUNDS AS OF DECEMBER
31, 2002 (incorporated herein by reference to the April 30, 2003 filing on form
N-1A post effective amendment No. 9 EDGAR filing)................
Pro Forma Financial
Statements......................................................................
71
NAVELLIER PERFORMANCE FUNDS' LARGE CAP GROWTH PORTFOLIO
AND
NAVELLIER MILLENNIUM FUNDS' LARGE CAP GROWTH PORTFOLIO
AND
TOUCHSTONE STRATEGIC TRUST'S LARGE CAP GROWTH FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
December 31, 2002
72
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)
NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE
TST LARGE CAP VALUE LARGE CAP GROWTH
LARGE CAP GROWTH FUND PORTFOLIO PORTFOLIO
------------------------ ----------------------- -----------------------
SHARES/ MARKET SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE PAR VALUE
------- ----------- ---------- ---------- ---------- ---------
COMMON STOCKS AND EQUITY INTERESTS
BASIC MATERIALS
Semiconductors and Related
Applied Materials, Inc. - - 2,830 36,874 37,700 491,231
--------- --------- ---------
ENERGY
Oilfield Equipment
BJ Services Co. 27,100 875,601 - - - -
Weatherford Intl Ltd 10,600 423,258 - - - -
--------- --------- ---------
1,298,859 - -
INDUSTRIAL
Industrial Diversified
3M Co. 4,650 573,345 - - - -
--------- --------- ---------
CONSUMER, CYCLICAL
Automotive
Nissan Motor Co. Ltd. - - 1,770 27,223 24,800 381,424
--------- --------- ---------
Entertainment
Fox Entertainment Group, Inc. - - 1,120 29,042 17,125 444,051
--------- --------- ---------
Media Publishing
Viacom Inc. - Class A 22,250 908,023 - - - -
--------- --------- ---------
Other Recreation
Harley-Davidson, Inc. 19,200 887,040 585 27,027 8,500 392,700
--------- --------- ---------
Restaurants
Darden Restaurants Inc. 22,450 459,102 - - - -
--------- --------- ---------
Retailers, Apparel
Nike - - 170 7,560 9,800 137,857
--------- --------- ---------
Retailers, Broadline
Kohls Corp 15,850 886,807 310 17,345 4,050 226,598
Walgreen Co. 20,000 583,800 - - - -
The TJX Companies, Inc. - - 1,580 30,842 19,000 370,880
Wal-Mart Stores, Inc. 22,750 1,149,103 555 28,092 9,500 479,845
--------- --------- ---------
2,619,710 76,219 1,077,323
Retailers, Specialty
Bed Bath & Beyond Inc. 28,050 968,567 510 17,610 7,975 275,377
Lowe's Companies, Inc. 25,000 937,600 500 18,750 6,700 251,250
Staples, Inc. 27,200 497,760 - - - -
--------- --------- ---------
2,403,827 36,360 526,627
CONSUMER, NON-CYCLICAL
Food, Beverage and Tobacco
Sysco Corp. - - 590 17,576 8,775 261,407
Wm. Wrigley Jr. Co. - - 360 19,757 6,600 301,840
Anheuser-Busch Co., Inc. 8,000 387,200 - - - -
Pepsico, Inc. 14,300 603,746 - - - -
--------- --------- ---------
990,946 37,333 563,247
Consumer Products and Services
The Clorox Co. - - 735 30,319 10,000 412,500
eBay, Inc. - - 640 43,405 8,550 579,861
Apollo Group Inc. 13,850 609,400 - - - -
--------- --------- ---------
609,400 73,724 992,361
Food Retailers
Whole Foods Market Inc. 8,000 421,840 - - - -
--------- --------- ---------
PRO FORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
--------------------- ------------------------
SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE
-------- ------- --------- ------------
COMMON STOCKS AND EQUITY INTERESTS
BASIC MATERIALS
Semiconductors and Related
Applied Materials, Inc. - - 40,530 528,105
-----------
ENERGY
Oilfield Equipment
BJ Services Co. - - 27,100 875,601
Weatherford Intl Ltd - - 10,600 423,258
-----------
- - 1,298,859
INDUSTRIAL
Industrial Diversified
3M Co. - - 4,650 573,345
-----------
CONSUMER, CYCLICAL
Automotive
Nissan Motor Co. Ltd. - - 26,570 408,647
-----------
Entertainment
Fox Entertainment Group, Inc. - - 18,245 473,093
-----------
Media Publishing
Viacom Inc. - Class A - - 22,250 908,023
-----------
Other Recreation
Harley-Davidson, Inc. - - 28,285 1,306,767
-----------
Restaurants
Darden Restaurants Inc. - - 22,450 459,102
-----------
Retailers, Apparel
Nike - - 9,970 145,417
-----------
Retailers, Broadline
Kohls Corp - - 20,210 1,130,750
Walgreen Co. - - 20,000 583,800
The TJX Companies, Inc. - - 20,580 401,722
Wal-Mart Stores, Inc. - - 32,805 1,656,980
-----------
- - 3,773,252
Retailers, Specialty
Bed Bath & Beyond Inc. - - 36,535 1,261,554
Lowe's Companies, Inc. - - 32,200 1,207,500
Staples, Inc. - - 27,200 497,760
-----------
- - 2,966,814
CONSUMER, NON-CYCLICAL
Food, Beverage and Tobacco
Sysco Corp. - - 9,365 278,983
Wm. Wrigley Jr. Co. - - 5,860 321,597
Anheuser-Busch Co., Inc. - - 8,000 387,200
Pepsico, Inc. - - 14,300 603,746
-----------
1,691,628
Consumer Products and Services
The Clorox Co. - - 10,735 442,819
eBay, Inc. - - 9,190 623,266
Apollo Group Inc. - - 13,850 609,400
-----------
1,675,485
Food Retailers
Whole Foods Market Inc. - - 8,000 421,840
-----------
73
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)
TST NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE
LARGE CAP GROWTH FUND LARGE CAP VALUE PORTFOLIO LARGE CAP GROWTH PORTFOLIO
---------------------- ------------------------- --------------------------
SHARES/ MARKET SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE PAR VALUE
-------- ---------- -------- ----------- ---------- ------------
Health Care Providers
Tenet Healthcare Corp. 25,800 423,120 - - - -
---------- --------- ---------
Healthcare Products and Services
Forest Laboratories, Inc. - - 365 35,850 4,825 473,912
Johnson & Johnson - - 415 22,290 7,200 386,712
---------- --------- ---------
- 58,140 860,624
Household Products (Non-Durable)
Colgate-Palmolive Co. 18,700 980,441 - - - -
Procter & Gamble Company 6,850 588,689 - - - -
---------- --------- ---------
1,569,130 - -
Medical Supplies
Stryker Corp. 460 30,875 4,550 305,396
Cardinal Health Inc. 18,300 1,083,177 - - - -
Medtronic Inc. 28,800 1,313,280 - - - -
---------- --------- ---------
2,396,457 30,875 305,396
Pharmaceuticals
Amgen, Inc. 25,000 1,208,500 - - - -
Caremark Rx Inc. 43,500 706,875 - - - -
Johnson & Johnson 21,250 1,141,337 - - - -
Lilly (Eli) & Co. 8,800 558,800 - - - -
Pfizer, Inc. 40,800 1,247,256 - - - -
---------- --------- ---------
4,862,768 - -
TECHNOLOGY
Computer Equipment
Cisco Systems, Inc. - - 1,800 23,580 23,875 312,762
Dell Computer Corp. - - 1,690 45,191 28,500 762,090
Emulex Corp. - - 900 16,695 15,100 280,105
Hewlett-Packard Co. - - 1,375 23,870 18,375 318,990
International Business Machines
Corp. - - 575 44,563 7,500 581,250
---------- --------- ---------
- 153,899 2,255,197
Computers & Information
Dell Computer Corp 29,900 799,526 - - - -
SEI Investments 30,400 826,272 - - - -
The Bisys Group, Inc. 32,150 511,185 - - - -
---------- --------- ---------
2,136,983 - -
Semiconductor & Related
Intel Corp. 31,100 484,227 - - - -
Qlogic Corporation 18,000 621,180 - - - -
---------- --------- ---------
1,105,407 - -
PRO FORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
------------------ -----------------------
SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE
------- ------ -------- ---------
Health Care Providers
Tenet Healthcare Corp. - - 25,800 $ 423,120
---------
Healthcare Products and Services
Forest Laboratories, Inc. - - 5,190 509,762
Johnson & Johnson - - 7,615 409,002
---------
- - 918,764
Household Products (Non-Durable)
Colgate-Palmolive Co. - - 18,700 980,441
Procter & Gamble Company - - 6,850 588,689
---------
- - 1,569,130
Medical Supplies
Stryker Corp. - - 5,010 336,271
Cardinal Health Inc. - - 18,300 1,083,177
Medtronic Inc. - - 28,800 1,313,280
---------
- - 2,732,728
Pharmaceuticals
Amgen, Inc. - - 25,000 1,208,500
Caremark Rx Inc. - - 43,500 706,875
Johnson & Johnson - - 21,250 1,141,337
Lilly (Eli) & Co. - - 8,800 558,800
Pfizer, Inc. - - 40,800 1,247,256
---------
- - 4,862,768
TECHNOLOGY
Computer Equipment
Cisco Systems, Inc. - - 25,675 336,342
Dell Computer Corp. - - 30,190 807,281
Emulex Corp. - - 16,000 296,800
Hewlett-Packard Co. - - 19,750 342,860
International Business Machines
Corp. - - 8,075 625,813
---------
- - 2,409,096
Computers & Information
Dell Computer Corp - - 29,900 799,526
SEI Investments - - 30,400 826,272
The Bisys Group, Inc. - - 32,150 511,185
---------
- - 2,136,983
Semiconductor & Related
Intel Corp. - - 31,100 484,227
Qlogic Corporation - - 18,000 621,180
---------
- - 1,105,407
74
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)
TST NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE
LARGE CAP GROWTH FUND LARGE CAP VALUE PORTFOLIO LARGE CAP GROWTH PORTFOLIO
--------------------- ------------------------- --------------------------
SHARES/ MARKET SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE PAR VALUE
------- ---------- ---------- ------------- ----------- ------------
Software & Processing
Yahoo! Inc. - 1,450 23,707 19,325 315,964
Affiliated Computer Svcs. 21,100 1,110,915 - - - -
Cisco Systems, Inc. 95,900 1,256,290 - - - -
First Data Corp. 15,000 531,150 820 29,036 12,275 434,658
Intuit Inc. 11,000 516,120 810 38,005 10,875 510,255
Microsoft Corp. 29,350 1,517,395 520 26,884 8,350 431,695
Sungard Data Systems 44,450 1,047,242 - - - -
Veritas Software Corp. 30,250 472,505 - - - -
---------- -------- -----------
6,451,617 117,632 1,692,572
Telecommunications Equipment and Services
Nextel Communications, Inc. - - 3,150 36,383 42,275 488,276
QUALCOMM, Inc. - - 1,170 42,576 15,900 578,601
---------- -------- -----------
- 78,959 1,066,877
FINANCIAL SERVICES
Banking, Major
Bank of New York Co., Inc. 29,900 716,404 - - - -
---------- -------- -----------
716,404 - -
Financial Services, Diversified
Freddie Mac 22,500 1,328,625 - - - -
SLM Corp. 12,150 1,261,899 470 48,814 6,900 716,634
---------- -------- -----------
2,590,524 48,814 716,634
Insurance
The Allstate Corp. - - - - 10,550 390,244
AFLAC, Inc. - - 660 24,413 - -
The Progressive Corp. - - 525 26,056 8,700 431,781
---------- -------- -----------
- 50,469 822,025
Regional Banks
Fifth Third Bancorp 15,300 895,815 - - - -
---------- -------- -----------
895,815 - -
CONGLOMERATES
Conglomerates
General Electric Co. 37,450 911,908 - - -
---------- -------- -----------
TOTAL COMMON STOCKS AND EQUITY INTERESTS 35,232,225 890,150 12,726,146
---------- -------- -----------
GOVERNMENT AGENCY OBLIGATIONS
FNMA Discount Notes, 1.25%, due 1/2/03 - - 104,000 103,993 - -
---------- -------- -----------
CASH EQUIVALENTS
Money Market Fund
FBR Fund for Government Investors - - 887 887 1,189,273 1,189,273
---------- -------- -----------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS AT MARKET 35,232,225 995,030 13,915,419
---------- --------- -----------
TOTAL INVESTMENTS AT COST 42,106,795 1,052,830 14,796,893
---------- --------- -----------
PRO FORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
------------------ ------------------------
SHARES/ MARKET SHARES/ MARKET
PAR VALUE PAR VALUE
-------- -------- --------- -----------
Software & Processing
Yahoo! Inc. - - 20,775 $ 339,671
Affiliated Computer Svcs. - - 21,100 1,110,915
Cisco Systems, Inc. - - 95,900 1,256,290
First Data Corp. - - 28,095 994,844
Intuit Inc. - - 22,685 1,064,380
Microsoft Corp. - - 38,220 1,975,974
Sungard Data Systems - - 44,450 1,047,242
Veritas Software Corp. - - 30,250 472,505
-----------
- - 8,261,821
Telecommunications Equipment and Services
Nextel Communications, Inc. - - 45,425 524,659
QUALCOMM, Inc. - - 17,070 621,177
-----------
- - 1,145,836
FINANCIAL SERVICES
Banking, Major
Bank of New York Co., Inc. - - 29,900 716,404
-----------
- - 716,404
Financial Services, Diversified
Freddie Mac - - 22,500 1,328,625
SLM Corp. - - 19,520 2,027,347
-----------
- - 3,355,972
Insurance
The Allstate Corp. - - 10,550 390,244
AFLAC, Inc. - - 660 24,413
The Progressive Corp. - - 9,225 457,837
-----------
- - 872,494
Regional Banks
Fifth Third Bancorp - - 15,300 895,815
-----------
- - 895,815
CONGLOMERATES
Conglomerates
General Electric Co. - - 37,450 911,908
-----------
TOTAL COMMON STOCKS AND EQUITY INTERESTS 48,848,521
-----------
GOVERNMENT AGENCY OBLIGATIONS
FNMA Discount Notes, 1.25%, due 1/2/03 - - 104,000 103,993
-----------
CASH EQUIVALENTS
Money Market Fund
FBR Fund for Government Investors - - 1,190,160 1,190,160
-----------
- -----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS AT MARKET - $50,142,674
-----------
TOTAL INVESTMENTS AT COST - $57,956,518
-----------
- ---------------------------------
(A) Navellier Performance Large Cap Growth Portfolio is the accounting survivor,
however the surviving Fund name is TST Large Cap Growth Fund.
75
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING PRO FORMA FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
(UNAUDITED)
Navellier Navellier
TST Millennium Performance TST
Large Cap Large Cap Large Cap Pro Forma Large Cap
Growth Fund Growth Portfolio Growth Portfolio Adjustments Growth Fund (A)
----------- ---------------- ---------------- ------------ ---------------
ASSETS
Investments, at cost $ 42,106,795 $ 1,052,830 $ 14,796,893 $ - $ 57,956,518
============= ============= ============= ============= =============
Investments, at market value $ 35,232,225 $ 995,030 $ 13,915,419 $ - $ 50,142,674
Receivable for securities sold 329,163 873 - - 330,036
Dividend and interest receivable 19,244 455 7,123 - 26,822
Other Assets 23,575 - 592 - 24,167
------------- ------------- ------------- ------------- -------------
Total Assets 35,604,206 996,358 13,923,134 - 50,523,698
------------- ------------- ------------- ------------- -------------
LIABILITIES
Payable for securities purchased 147,320 - - - 147,320
Bank overdraft 322,221 - - - 322,221
Payable for Fund shares repurchased 44,506 20 76,662 - 121,188
Advisory and distribution fees payable - 870 10,102 - 10,972
Accrued expenses and other liabilities 100,455 253 4,906 - 105,614
------------- ------------- ------------- ------------- -------------
Total Liabilities 614,501 1,143 91,670 - 707,314
------------- ------------- ------------- ------------- -------------
Net Assets $ 34,989,705 $ 995,215 $ 13,831,464 $ - $ 49,816,384
============= ============= ============= ============= =============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 75,392,621 $ 1,471,568 $ 35,591,483 $ - $ 112,455,672
Distributions in excess of net investment income (321,214) - - - (321,214)
Accumulated net realized loss on investments (33,207,132) (418,553) (20,878,545) - (54,504,230)
Unrealized depreciation of investments (6,874,570) (57,800) (881,474) - (7,813,844)
------------- ------------- ------------- ------------- -------------
Net Assets $ 34,989,705 $ 995,215 $ 13,891,464 $ - $ 49,816,384
============= ============= ============= ============= =============
BY CLASS:
NET ASSETS:
CLASS A $ 33,843,198 $ 355,316 $ 13,831,464 $ - $ 48,029,978
CLASS B 54,017 423,950 - - 477,967
CLASS C 1,092,490 215,949 - - 1,308,439
------------- ------------- ------------- ------------- -------------
$ 34,989,705 $ 995,215 $ 13,831,464 $ - $ 49,816,384
============= ============= ============= ============= =============
OUTSTANDING SHARES:
CLASS A 4,202,127 76,781 1,134,468 (1,473,452) 3,939,924
CLASS B 7,090 92,912 - (60,792) 39,210
CLASS C 143,907 47,449 - (84,019) 107,337
------------- ------------- ------------- ------------- -------------
4,353,124 217,142 1,134,468 (1,618,263) 4,086,471
============= ============= ============= ============= =============
NET ASSET VALUE PER SHARE:
CLASS A $ 8.05 $ 4.63 $ 12.19 $ 12.19
------------- ------------- ============= -------------
CLASS B $ 7.62 $ 4.56 $ 12.19
------------- ------------- -------------
CLASS C $ 7.59 $ 4.55 $ 12.19
------------- ------------- -------------
(A) The Navellier Performance Large Cap Growth Portfolio is the accounting
survivor, however the surviving Fund name and legal survivor is TST Large Cap
Growth.
76
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002
(UNAUDITED)
Navellier Navellier
TST Millennium Performance TST (Basis Points)
Large Cap Large Cap Large Cap Large Cap Pro Forma
Growth Fund Value Fund Growth Portfolio Adjustments Growth Fund (F) Combined
------------ ------------ ---------------- ------------ --------------- --------------
INVESTMENT INCOME
Dividend Income $ 238,986 $ 4,529 $ 103,515 $ - $ 347,030
Interest Income 20,792 1,574 5,063 - 27,429
------------ ------------ ------------ ------------ ------------
Total Income 259,778 6,103 108,578 - 374,459
------------ ------------ ------------ ------------ ------------
EXPENSES
Management fee 398,485 7,883 135,879 (168,624)(A) 373,623 0.7500%
Distribution Fees - Class A 129,171 789 40,440 (50,325)(A) 120,075 0.2410%
Distribution Fees - Class B 414 2,941 - 1,424 (A) 4,779 0.0096%
Distribution Fees - Class C 14,215 1,788 - (2,919)(A) 13,084 0.0263%
Administration fees 9,073 - 40,440 (22,114)(A) 27,399 0.0550%
Accounting fees 51,492 - - (27,492)(A) 24,000 0.0482%
Audit and legal fees 23,362 8,964 16,054 (18,380)(B) 30,000 0.0602%
Custodian fee 12,213 60,789(E) 58,163(E) (113,165)(B) 18,000 0.0361%
Directors/ Trustees fees 6,054 6,750 7,143 (13,893)(C) 6,054 0.0122%
Registration fees - 32,275 16,410 (48,685)(B) - 0.0000%
Registration fees - Class A 7,890 - - - 7,890 0.0158%
Registration fees - Class B 11,404 - - - 11,404 0.0229%
Registration fees - Class C 11,611 - - - 11,611 0.0233%
Report Printing 29,175 1,729 15,569 (11,473)(B) 35,000 0.0703%
Transfer Agent Fees - Class A 32,639 - - 13,361 (A) 46,000 0.0923%
Transfer Agent Fees - Class B 12,049 - - (49)(A) 12,000 0.0241%
Transfer Agent Fees - Class C 11,983 - - 17 (A) 12,000 0.0241%
Other expense 35,462 1,156 24,692 (11,310)(D) 50,000 0.1004%
------------ ------------ ------------ ------------ ------------ -------
796,692 125,064 354,790 (473,627) 802,919 1.6118%
Fees waived (Class A) (10,683) (43,852) (113,766) 73,346 (A) (94,955) -0.1906%
Fees waived (Class B) (23,324) (40,973) - 42,881 (A) (21,416) -0.0430%
Fees waived (Class C) (16,837) (24,868) - 19,751 (A) (21,954) -0.0441%
------------ ------------ ------------ ------------ ------------
Total expenses, net of fees waived 745,848 15,371 241,024 (337,649) 664,594 1.3341%
------------ ------------ ------------ ------------ ------------ -------
NET INVESTMENT INCOME (486,070) (9,268) (132,446) 337,649 (290,135)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized gain (loss) on investments $(17,874,899) $ (126,421) $ (2,363,379) $ - $(20,364,699)
Change in unrealized appreciation
(depreciation) (6,475,548) (100,611) (2,449,986) - (9,026,145)
of investments - - - - -
------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (24,350,447) (227,032) (4,813,365) - (29,390,844)
------------ ------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS $(24,836,518) $ (236,300) $ (4,945,811) $ 337,649 $(29,680,980)
============ ============ ============ ============ ============
(A) Based on contract in effect for the legal surviving fund. Management Fee is
.75%. Distribution Fee is Class A .25%, Class B 1.00%, Class C 1.00%.
(B) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(C) Based on director compensation plan for the legal surviving fund.
(D) Includes pricing, Insurance expense and T/A out-of-pocket fees.
(E) For Navellier funds includes Accounting, Custody and Transfer Agent fees.
(F) Navellier Performance Large Cap Growth Portfolio is the accounting
survivor, however the surviving Fund name is TST Large Cap Growth.
77
NAVELLIER PERFORMANCE FUNDS
LARGE CAP GROWTH PORTFOLIO
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 2002
(UNAUDITED)
DESCRIPTION OF THE FUND
The Acquiring Fund, Navellier Performance Funds Large Cap Growth Portfolio,
is registered under the Investment Company Act of 1940, as amended, as an
open-end, non-diversified management company portfolio consisting of Class A
shares. The Target Funds, Navellier Millennium Large Cap Growth Portfolio and
Touchstone Strategic Trust Large Cap Growth Fund are registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. Navellier Millennium Large Cap Growth Portfolio, consisting
of Class A, B and C shares, is a non-diversified open-end management company.
Touchstone Strategic Large Cap Growth Fund, consisting of Class A, B and C
shares is a diversified open-end management company.
BASIS OF COMBINATION
The accompanying unaudited pro forma financial statements are presented to
show the effect of the transfer of assets and liabilities of the non-surviving
funds, the Navellier Millennium Funds Large Cap Value Portfolio and the
Touchstone Strategic Trust Large Cap Growth Fund, in exchange for shares of the
surviving fund (for purposes of maintaining the financial statements and
performance), the Navellier Performance Funds Large Cap Growth Portfolio.
Under the terms of the Plan of Reorganization, the combination of the
surviving and non-surviving funds will be accounted for by the method of
accounting for tax-free mergers of investment companies. The statement of assets
and liabilities and the related statement of operations of the surviving and
non-surviving funds have been combined as of and for the twelve months ended
December 31, 2002. In accordance with accounting principles generally accepted
in the United States, the historical cost of investment securities will be
carried forward to the surviving fund and the results of operations for
pre-combination periods of the surviving fund will not be restated.
At the time of the combination, the combined fund will change its name to
the Touchstone Strategic Trust Large Cap Growth Fund and shares of the surviving
fund will actually represent shares of the Navellier Performance Funds Large Cap
Growth Portfolio. Initially, the new Class B and Class C shares net asset values
will equal the Navellier Performance Funds Large Cap Growth Portfolio net asset
value. Performance history for the Class B and Class C shares will not be
carried forward from either of the existing target Funds Class B and Class C
shares, instead performance history will be initiated upon consummation of the
merger.
The accompanying pro forma financial statements should be read in
conjunction with the historical financial statements of the funds included or
incorporated by reference in the Statement of Additional Information.
PORTFOLIO VALUATION
Equity securities listed on national securities exchanges are valued at the
last sale price as of the close of business on the day the securities are being
valued. Over-the-counter securities are valued at the last sales price. Debt
securities with maturities of 60 days or less are valued at amortized cost. In
the absence of readily available market quotations, securities are valued at
fair value under procedures established by and under the general supervision of
the Board of Trustees.
CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of shares of
Acquiring Fund that would have been issued at December 31, 2002, in connection
with the proposed reorganization. The number of shares assumed to be issued is
equal to the net asset
78
value of shares of each Target Fund, as of December 31, 2002, divided by the net
asset value per share of the shares of Acquiring Fund as of December 31, 2002.
The pro forma number of shares outstanding for the combined fund consists of the
following at December 31, 2002:
SHARES OF ADDITIONAL SHARES TOTAL OUTSTANDING
ACQUIRING FUND ASSUMED ISSUED SHARES
- ------------------------------------- ----------------------------------- -----------------------------------
Pre-Combination In Reorganization Post-Combination
1,134,468 2,952,003 4,086,471
ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition, the Acquiring Fund intends to
continue to qualify as a regulated investment company, if such qualification is
in the best interest of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from all, or substantially all, Federal income taxes.
The identified cost of investments for the funds is substantially the same for
both financial accounting and Federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
79
TOUCHSTONE STRATEGIC TRUST
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
(a) Article VI of the Restated Agreement and Declaration of Trust of
Touchstone Strategic Trust (the "Registrant") provides for
indemnification of officers and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc.
The Trust shall indemnify each of its Trustees and officers,
including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, in which such
Covered Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or Officer or Director and except that no
Covered Person shall be indemnified against any liability to the
Trust or its Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office ("disabling conduct").
Anything herein contained to the contrary notwithstanding, no
Covered Person shall be indemnified for any liability to the Trust
or its Shareholders to which such Covered Person would otherwise be
subject unless (1) a final decision on the merits is made by a court
or other body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by reason of
disabling conduct or, (2) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts,
that the Covered Person was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of Trustees who
are neither "interested persons" of the Company as defined in the
Investment Company Act of 1940 nor parties to the proceeding
("disinterested, non-party Trustees"), or (b) an independent legal
counsel in a written opinion
Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or other expenses incurred
by a Covered Person in defending a proceeding, upon the undertaking
by or on behalf of the Covered Person to repay the advance unless it
is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met:
(i) the Covered Person shall provide security for his undertaking,
(ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum of the
disinterested non-party Trustees of the Trust, or an independent
legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification .
Section 6.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this Article VI shall not
be exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered Person"
shall include such person's heirs,
80
executors and administrators, an "interested Covered Person" is one
against whom the action, suit or other proceeding in question or
another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been
pending or threatened. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of any
such person.
(b) The Registrant maintains a mutual fund and investment advisory
professional and Trustees and officers liability policy. The policy
provides coverage to the Registrant, its trustees and officers,
Touchstone Advisors, Inc. ("Touchstone") and sub-advisors. Coverage
under the policy includes losses by reason of any act error,
omission, misstatement, misleading statement, neglect or breach of
duty. The Registrant may not pay for insurance which protects the
Trustees and officers against liabilities arising from action
involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their
offices.
The Advisory Agreement and the Subadvisory Agreements provide that
Touchstone (or a Sub-advisor) shall not be liable for any act or
omission in the course of rendering services, absent willful
misfeasance, bad faith or gross negligence or reckless disregard by
Touchstone (or a Sub-advisor) of its obligations under the
Agreement.
ITEM 16. EXHIBITS
(1) Declaration of Trust of Registrant.
(2) By-Laws of Registrant.
(3) Voting Trust Agreement. [Not applicable]
(4) Agreement and proposed Plan of Reorganization. (Filed herewith as
Appendix A to Part A)
(5) Specimen share certificate.
(6) Form of Management Contract between the Large Cap Growth Fund (a
portfolio of the Touchstone Strategic Trust) and Touchstone
Advisors, Inc. (Filed herewith as Appendix B to Part A.)
(6)(a) Form of Investment Sub-advisory Contract between Touchstone
Advisors, Inc. and Navellier Management, Inc. if the merger is
approved. (Filed herewith as Appendix C to Part A.)
(6)(c) Form of management Contract.
(7) Form of Underwriting Agreement.
(8) Bonus, Profit Sharing, or Pension Plans. [Not applicable]
(9) Form of Custody Agreement between Registrant and Integrated Fund
Services, Inc.
(10) Form of Rule 12b-1 Distribution Plan. Filed as Appendix D to Part A.
(11) Opinion of legal counsel regarding the legality of securities being
registered.
(12) Opinion of legal counsel regarding certain tax matters and
consequences to shareholders discussed in Part A.
81
(13) Form of Administrative Services Agreement between Registrant and
Navellier Management, Inc.
(14) Consent of Tait, Weller & Baker, independent accountants for The
Navellier Performance Funds and for Navellier Millennium Funds.(6)
(14)(a) Consent of Ernst & Young LLP, independent accountants for
Registrant.(6)
(14)(c) Consent of Sullivan & Worcester LLP (see exhibit (11)).
(14)(d) Consent of Sullivan & Worcester LLP (see exhibit (12)).
(15) Financial Statements Omitted Pursuant to Item 14(a)(1). [Not
Applicable]
(16) Powers of Attorney.
(17) Rule 24f-2 Notice. [Not Applicable]
- --------------------------------------------------------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. __ to the
Registrant's Registration Statement on Form N-1A previously filed
_____, 19__.
(2) None.
(3) Incorporated by reference to Registrant's 24f-2 Notice filed
February 28, 1998.
(4) Incorporated by reference to Pre-effective Amendment No. __ to
Registrant's N-14 EDGAR filing on June __, 2003.
(5) Incorporated by reference to Post-effective Amendment No. __ to
Registrant's Registration Statement on Form N-1A filed _____ __,
19__
(6) Filed herewith.
82
ITEM 17 UNDERTAKINGS
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is
part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c)
under the Securities Act of 1933, as amended, the reoffering
prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1), above, will be filed as part of an amendment to
this Registration Statement and will not be used until the
amendment is effective, and that, in determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering
of them.
(3) The Registrant undertakes to file, by post-effective amendment, a
copy of an opinion Of Counsel as to certain tax matters within a
reasonable time after receipt of such opinion.
- -----------------------------
83
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Cincinnati
and the State of Ohio, on the 3rd day of July, 2003.
Registrant:
TOUCHSTONE STRATEGIC TRUST
BY: /s/ Patrick T. Bannigan
-----------------------------------------
Patrick T. Bannigan
President
BY: /s/ Terrie A. Wiedenheft
-----------------------------------------
Terrie A. Wiedenheft
Controller
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/ Jill T. McGruder Trustee July 3, 2003
________________________________
Jill T. McGruder
/s/ John F. Barrett Trustee July 3, 2003
________________________________
John F. Barrett
/s/ J. Leland Brewster II Trustee July 3, 2003
________________________________
J. Leland Brewster II
/s/ William O. Coleman Trustee July 3, 2003
________________________________
William O. Coleman
/s/ Phillip R. Cox Trustee July 3, 2003
________________________________
Phillip R. Cox
/s/ H. Jerome Lerner Trustee July 3, 2003
________________________________
H. Jerome Lerner
/s/ Oscar P. Robertson Trustee July 3, 2003
________________________________
Oscar P. Robertson
/s/ Robert E. Stautberg Trustee July 3, 2003
________________________________
Robert E. Stautberg
/s/ John P. Zanotti Trustee July 3, 2003
________________________________
John P. Zanotti
84
EXHIBITS TO
PART C
85